Budget provides impetus to domestic steel industry

The steel sector has plenty to cheer in the Budget 2012-13, as it has proposed increasing the import duty on flat-rolled steel to 7.5 per cent and reducing duty on plant and machinery imports for iron ore beneficiation to 2.5 per cent.

Finance Minister Pranab Mukheree has also reduced basic customs duty on coating material for the manufacture of electrical steel from 7.5 per cent to five per cent; and nickel ore and concentrate and nickel oxide from 2.5 per cent or 7.5 per cent to nil.

He also enhanced export duty on chromium ore from Rs 3,000 per tonne to 30 per cent ad valorem.

Presenting the Budget today, Mukherjee proposed to enhance the basic customs duty on non-alloy, flat-rolled steel from five per cent to 7.5 per cent.

A long-pending demand of the steel makers, this move would discourage imports and thus and go a long way in protecting the interests of the domestic industry.

The domestic steel industry has also been demanding a blanket ban on iron ore exports and lending ear to their requests, the government has increased duty on iron ore exports to 30

per cent for all kinds of iron ore within a year from as low as five per cent.

However, the Finance Minister did not go for hiking the export duty this time, in stead, he has proposed to provide incentives for beneficiation of iron ore domestically aimed at preserving the steel-making raw material.

"To encourage enrichment of low-grade iron ore, of which we have huge reserves, I propose to reduce basic customs duty on plant and machinery imported for setting up or substantial expansion of iron ore pellet plants or iron ore beneficiation plants from 7.5 per cent to 2.5 per cent," he added.

Mukherjee has also proposed to reduce basic customs duty on coating material for manufacture of electrical steel from 7.5 per cent to 5 per cent; and nickel ore and concentrate and nickel oxide/ hydroxide from 2.5 per cent or 7.5 per cent to nil.

Enhancement of export duty on chromium ore from Rs 3,000 per tonne to 30 per cent ad valorem would also augur well for the steel industry.