The steel industry wants to review the customs duty on some of the raw materials used by the sector, and also certain tax rules to create a level-playing field for Indian steel manufacturers in the global arena, because of the fact that it plays an important role in the overall infrastructure development of the country.
Ahead of the Union Budget 2022-23, the Indian Steel Association ISA, the industry body of steel manufacturers of the country, has submitted its wish list to the government, which calls for reducing and rationalising various duties and taxes along with policy measures to boost the growth of the industry.
Since the availability of these input raw materials is very low, the government has asked for the reduction of the basic customs duty on coking coal, SS scrap, nickel to nil from the current 1 per cent plus 1.5 per cent agriculture cess.
It has also sought the inclusion of petrol, oil, lubricants and natural gas under the purview of GST.
Since these materials are currently outside the purview of GST, steel companies are not able to avail of any input credit against these materials, it said.
It sought a waiver of coal cess or refund of the input tax credit ITC on GST compensation cess of Rs 400 per tonne of coal consumed for domestic steel sales.
The clean energy fund was created by the government with contributions from the clean energy cess imposed on coal mined in India or imported. The cess went from Rs 50 per tonne in 2010 to Rs 400 per tonne in 2016. With GST coming into effect, it became part of the GST compensation cess.
The ISA believes that a waiver or refund would help reduce input costs and, in turn, the downstream industry's prices.
In another important suggestion to the government, the industry body has sought the removal of the Lesser Duty Rule'' or LDR, which was introduced over two decades ago in 1999. The ISA has highlighted the fact that even the Ministry of Commerce is in favor of the removal of LDR.
The industry body says that the LDR has become ineffective because it is not binding on WTO members and large economies, including USA, China and Canada, even though import tariffs have been reduced to as low as zero under the various Free Trade Agreements and Regional Trade Agreements.
The Indian steel players are concerned by ISA's submission to the government ahead of the Union Budget. According to Alok Sahay, Secretary General, Indian Steel Association, the steel sector needs to grow from the current installed capacity of 144 million tons to 300 million tonnes.
A reduction and rationalization of certain duties along with certain policy measures will help to create a level playing field in the global arena, especially where 2 3rd of imports from countries with FTA with India arrive at zero basic customs duty. Sahay believes that the finance ministry should consider our memorandum and hope that the government intervenes with the necessary measures.
The ISA has sought the linking of Steel Import Monitoring System SIMS with the Central Board of Indirect Taxes and Customs CBIC portal that provides e-filing services, while including iron and steel in the Remission of Duties and Taxes on Export Products RoDTEP scheme.
The ISA believes that such inclusion would boost Indian steel companies' global competitiveness and boost exports. The scheme, which was in effect on January 1, 2021, ensures that exporters receive embedded tax and duty refunds, which were previously not possible.
It has asked the finance ministry to restore Antidumping Duties ADD and Countervailing Duties CVD, which were suspended by the government early last year.