New Delhi: Ahead of the Union Budget, the stainless steel industry has asked the government to remove import duty on ferro-nickel and stainless steel scrap.

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The Indian Stainless Steel Development Association (ISSDA) has also sought removal of customs duty on key raw materials used in producing stainless steel.

"The government had removed customs duty on pure nickel in the last budget, it didn't help the industry much since most of the nickel used by stainless steelmakers are in the form ferro-nickel," the ISSDA has said.


The industry body pointed out that since all the stainless steel is produced through electric furnaces, stainless steel scrap is the main raw material which also provides a cost-effective source of alloying elements like chrome and nickel.

The scrap is also not available in the country and has to be imported, the body said asking the government to bring the customs duty for stainless steel scrap to zero from 2.5 percent at present.

Echoing the same sentiments, Rita Singh, CMD, Mesco Steel has said, "For the manufacturing of stainless steel in an electric furnace, stainless steel scrap is the key raw material. This scrap is not available in India and has to be imported and hence customs duty on import of scrap may be reduced to NIL from current duty of 2.5%."


She further said, "At present, there is no export duty on iron ore with 58% Fe (ferrous content), we suggest to reduce the export duty on 62% Fe. If this initiative is taken it would help the overall industry and exports from the industry would increase."


On other pertinent issues related to the steel sector, Mesco Steel CMD said, "Currently import duty on Coking Coal is 2.5% and many of the steel companies are dependent upon imported coking coal as the domestic quality is not suitable for the steel industry, due to higher ash content. The import duty to be levied should be NIL as this would, in turn, help the steel industry to reduce the raw material cost and would increase production. During FY18 (April – September), 22.6 MT of coking coal was imported. India’s coking coal imports have increased by 9.9% y-o-y basis. The removal of import duty would help in reducing the cost of producing the end product and would help to increase the profitability of steel companies, which would, in turn, benefit the industry as well as the economy as a whole."


On the other hand, the FICCI memorandum on steel states - "The current import duty on stainless steel products in India is at 7.5%, which is much lower in comparison to duty prevailing in other stainless steel producing countries. This has led to increased imports from 324,460 MT in 2013-14 to 532,033 MT in 2015-16. Imports from China have more than doubled from 111,765 MT in 2013-14 to 276,456 MT in 2015-16."


It adds, "China now accounts for more than 50% of the import basket. This is the single largest threat for the stainless-steel industry today... The basic customs duty on stainless steel flat products need to be increased from the existing 7.5% to 15%. Also, in order to safeguard the huge investment made towards the development of the Indian stainless-steel industry, the peak duty rates for stainless steel may be raised to 25% from the existing 15%."

Among other things, it also said, "Ferrous and stainless-steel scrap is not available indigenously in sufficient quantities. So, the domestic steel companies have to rely on imports of this key raw material. Imposition of import duty on the scrap increases the raw material cost adversely affecting the steel manufacturers’ competitiveness. Therefore, we recommend that import duty on ferrous and stainless-steel scrap should be reduced from the existing rate of 2.5% to 'NIL'."


"Anthracite Coal, Coking coal, Coke, Pet Coke, Limestone, Dolomite are vital inputs for the steel industry. The availability of these items in good quality is declining in the country and the Industry has to depend on their imports on regular basis. The basic customs import duty on Anthracite Coal is 2.5%... It is therefore recommended that Customs duty on Anthracite Coal (CTH 27011100) be reduced from 2.5% to NIL," FICCI further states.


(With Agency inputs)