Giving the much needed relief to the domestic steel manufacturers, the Finance Ministry has increased import duty on key steel products by 2.5% as a measure to safeguard domestic industry. The decision comes as China devaluates its currency which will make Chinese imports cheaper than Indian products and hurt the domestic industry. Finance Minister Arun Jaitley said “The hike in import duty would be effective immediately'.
While the move has come as a major booster for domestic steel producers who have been facing competition from abroad, the end users including the real estate sector will see a significant rise in their cost. This will also offset the potential gains for the end users in sectors such as construction, infrastructure, and engineering due to devaluation in the Chinese currency.
The import duty on stainless steel long products, alloy steel long products, non-alloy long products and alloy steel flat products have been raised to 10%, from 7.5%. Simultaneously, non-alloy flat products and some specified alloy steel products will have an import duty of 12.5% from 10 percent. The two exceptions were duty has been maintained at existing levels are CRGO (cold rolled grain oriented) steel or 'electrical steels' that few domestic players manufacture at 5% and stainless steel flat products at 7.5%. The products protected from duty hike are used in the manufacturing of power generation equipment. Steel imports shot up 71% to 9.3 million tonnes in 2014-15 year-on-year, with almost a third of it from China, the largest steel producer, consumer and exporter of the commodity.
Earlier in June, the government has increased the basic customs duty (BCD) on certain long and flat steel products by 2.5 percent. Import duty on flat steel products has been increased to 10 percent from 7.5 percent, whereas that on long steel product has been raised to 7.5 percent from 5 percent.
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