GST: Tata Steel can sell Kalinganagar products beyond Odisha

Firm was earlier bound to sell products from its Kalinganagar works only within the state

The roll-out of the goods and services tax (GST) scheduled from July 1, will allow Tata Steel to sell finished products manufactured at its Kalinganagar steel mill, in Odisha, outside the state.

Tata Steel was bound by a memorandum of understanding (MoU) signed with the state government in November 2004 to sell finished products from its Kalinganagar products within the state. The restrictive clause was not applicable to exports.

Kalinganagar started commercial operations in May 2016. Since then, its products such as ferroshots and hot rolled coils were exported, mainly to Southeast Asia. The finished steel products could not be sold within Odisha as the state lacked downstream industries to absorb these. 

Though Odisha has a nameplate capacity of 21 million tonnes (mt) annually in steel making, hardly 2.6 mt is consumed within the state. The consumption of finished steel points to the lack of downstream industries, despite the presence of steel majors like Tata Steel, Jindal Steel & Power Ltd (JSPL), Jindal Stainless Ltd (JSL) and Bhushan Steel.

Due to lack of demand for its products within Odisha, Tata Steel sorely needed to despatch products to other states where demand was robust.

Accordingly, Tata Steel had asked the state government to do away with the restrictive clause on sales.The state government was dithering due to revenue implications. The GST will help Tata Steel overcome this barrier because the tax is imposed on the destination principle and the consuming state will receive the tax revenue.

“Now we see no hurdle to sell products from Kalinganagar facility. The GST roll-out will ensure seamless transportation of our products. Though we were shipping products overseas, we preferred to sell more in the domestic market to ensure better margins,” a Tata Steel source said. “After GST, we have no ground to restrain Tata Steel to sell its products within the state. We will not oppose their sales,” an Odisha government official said.