Steel prices have grown, changing the Modi govt’s infrastructure potential. Now, it has decreased charges to expedite imports despite the ‘Atmanirbhar’ mission.
The Government of Narendra Modi has delivered a massive impact for self-reliance or ‘Atmanirbharta’ in the Budget 2021. But the indigenous steel industry has experienced an enormous setback in Budget. The sector has missed its grip upon foreign steel manufacturers, with the government either decreasing import charges on finished steel products or momentarily removing anti-dumping and other duties.
It was a unique move against the government’s attempts to boost domestic production, but it doesn’t appear as a complete wonder to the steel industry. In the last few months, steel prices were mounting, making it costly to build homes, roads and other infrastructure. It leads to a lot of resentment into the steel industry, with many declaring that it gained massive profits.
The Federation of Indian Mineral Industries (FIMI) wrote a letter to P.K. Mishra, Principal Secretary of the Prime Minister, and focused on steel manufacturers and attempted a ban on iron ore exports to falling steel prices. The letter claimed that steel manufacturers enjoyed a high degree of protection from international competition but were still satisfying profiteering.
FIMI had attempted withdrawal of the import charge to secure the domestic steel industry more aggressive. An essential customs duty, anti-dumping duty, and countervailing duty were imposed on most products, making shipped steel much more expensive than domestically manufactured steel.
In the last few months, domestic steel prices rising by nearly 50 per cent, and the government had little alternative to bring them down by facilitating steel imports. It was imperative as the government is trading on a massive infrastructure drive to strengthen demand after the economy suffered an enormous contraction in the pandemic.
Consequently, in the Budget, the government decreased import charges marginally and took off anti-dumping duty and countervailing charges for a specific period.
Harsh Shah, Partner at Economic Laws Practice (ELP), said that “For providing relief to the MSME and other consumers of the steel products and the recent sharp rise in prices, the Basic Customs Duty on several steel products such as ‘flat’ products and ‘long’ products of non-alloy and alloy steel has been reduced to 7.5 per cent from 10-12.5 per cent.”
Shah added that an exemption had been provided up to 31 March 2022 from duty on import of iron and steel scrap — it was earlier 2.5 per cent and has been reduced to nil. He said that “anti-dumping duty and countervailing duty on specified products of steel revoked up to 30 September 2021.”