The government removed customs duties on raw materials and increased export taxes to check local prices, which will negatively affect capacity expansion projects under PLI scheme, steel industry players said after the government imposed export duties on steel products. The government has waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry, a move that will lower the cost for the domestic industry and reduce the prices.
According to a notification, the duty on exports of iron ore was raised up to 50 per cent and a few steel intermediaries to 15 per cent to increase domestic availability.
The Indian Steel Association said in a statement that the industry welcomes the removal of import duty on coking coal and few other input raw materials for the industry.
The imposition of export duty on steel will only send a negative signal to investors and will adversely affect the sector's capacity utilisation. India has been increasing its steel and engineering exports over the last two years and has the potential to become a part of a larger supply chain.
India may lose the export opportunities now, and this decision may affect the overall economic activity in the country, the association said.
The imposition of export duty will help other countries increase their share in the global market, which India will vacate. The ISA noted that rebuilding the lost ground may take a very long time as the supply chain will be disrupted, while India's credibility will take a hit as a reliable exporter.
The steel industry in India has made the largest investment commitments ranging from 36 per cent to 40 per cent of total investments committed by the entire manufacturing sector. There are investments in capacity building that are needed to achieve the vision of Atmanirbhar Bharat.
In light of this decision, new capacities creation could be impacted as they would be seen as uneconomical and would affect the much-awaited investment against the PLI scheme for speciality steel. It may have a major impact on the entire supply chain in the long term. The economic activity of a few states that are dependent on minerals and steel will be further hit.
These measures need to be deliberated and then a calibrated approach can be taken. The steel industry is committed to nation-building, according to the association.