Center may revise steel export duties

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NEW DELHI : The government may soon revise tariffs on steel exports, cut them on some products and remove taxes on others, said two people who were aware of the discussions.

The revision of the taxes levied on May 22 is being considered to allow the steel industry to tap into overseas markets, while domestic demand is falling and export opportunities are at risk of drying up due to possible recessions in Europe and US markets .

The steel ministry took up the matter with the finance ministry after receiving several representations from the steel industry in June, people said, asking for anonymity.

“The deliberations on the revision of the service have recently been concluded and the revisions may be announced shortly,” said one of the people.

Vivek Johri, chairman of the Central Council of Indirect Taxation and Customs (CBIC), said: “We have received statements because there has been a change in price trends. They are being investigated”.

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While the CBIC chairman did not comment on the potential changes, the two people familiar with the development said the 15% export tax on some steel products could be halved or eliminated for some products.

TBEN reported on Aug. 5 that the Treasury Department is examining tax cuts for the steel sector after reviewing price developments in domestic and foreign markets. The ministry asked for more data from the industry to complete the analysis before deciding to revise export duties.

A question to the spokespersons of the finance and steel ministries about the control of the service went unanswered until going to press.

In May, the government imposed a 15% tariff on selected steel products, including pig iron, flat-rolled products made of both carbon and stainless steel, ingots, ingots and non-alloy steel, to control rising steel prices and inflation. The excise changes were also made for iron ore pellets, with an export duty of 45% being imposed, while the export duty on iron ore and concentrates was increased from 30% to 50%. “As a result of the export tax, the domestic price of benchmark hot rolled coils fell by more than 26% from a record 76,000 per tonne in April to almost 56,000 per ton now. In the absence of a major pick-up in domestic demand, steel companies are now saddled with rising inventories and face the prospect of losing margins for lack of an alternative point of sale,” said a chief executive of a leading steelmaker, who asked not to be named.

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“The conflict between Ukraine and Russia had opened doors for European markets, but the tariff has made steel prices uncompetitive. So an excise tax review, even now, will help the sector without increasing inflationary pressures,” he added.

The export tax has curtailed steel exports, which fell from 1.5 million tons (mt) in April to just over 500,000 tons in July. Iron ore exports also fell 69.1% in April-July. Despite a decline in exports, domestic consumption has not increased. In May, the government imposed an export duty on various commodities to counter the price increase. The industry exported a record 13.49 million tons of steel in FY22, up 25% from the previous year amid a surge in demand and prices. The trend continued in the early months of this fiscal year, but then the situation changed as domestic demand fell.

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