Govt keeps options open on steel export duty
The Centre has retained the option of levying an export duty of 20 per cent on a range of steel products through a statutory provision in the Finance Bill.
Whether this will happen remains to be seen as there are concerns on rising steel prices and shortage of certain variety of hot rolled coils in the market. The fact also remains that India, the world's third largest steel producer after China and Japan, is actually a net importer of steel.
PRODUCTS UNDER LEVY
According to the Finance Bill, the levy is applicable to tubes and pipes, wire of iron or non-alloy steel, angles, shapes and sections of iron or non-alloy steel, bars and rods of iron or non-ally steel, semi-finished products of iron or non-alloy steel, flat-rolled products of iron or non-alloy steel, hot rolled not clad, plated or coated, flat rolled products of iron or non-alloy steel, cold rolled not clad, plated or coated, flat rolled products of iron or non-alloy steel, plated or coated with zinc.
Besides, bars and rods of iron or non-alloy steel not further worked than forged, hot-rolled, hot drawn or hot extruded, but including those twisted after rolling and other bars and rods of iron or non-alloy steel, will also qualify.
“Exports would continue to remain at zero per cent as the Government has issued a notification in this regard. It is only an option as it need not go to Parliament if it wants to impose it at a later date,” a steel company executive told Business Line.
NOT MUCH IMPACT
Even if enforced, the duty will not have too much of an impact as domestic steel prices are driven by production costs and global pricing trends. In fact, steel prices here are always marginally lower than import prices, he added.
The country has exported 1,687,251 tonnes of steel in last nine months ended January. Exports were lower at 2,693,929 tonnes (3,792,476 tonnes) last fiscal.
The bigger problem at this point is the huge shortage of hot rolled coils of 2mm, 2.3mm and 2.5mm. These products account for 70 per cent of demand as they are used for further value additions, said Mr Anil Agarwal, a steel trader from Bhiwani, Haryana.
“The shortage in the market cannot be completely attributed to exports but the Government may have wanted to send a signal that the rising steel prices are a cause of concern when it has lined up huge investments in infrastructure,” he added.
Steel prices have been on a relentless rise lately and the last two months, in particular, saw a 30 per cent increase following the sharp spike in coking coal and iron ore prices.