Steel scrap gets exemption from basic Customs duty
Stainless steel products, including utensils, white goods for use in kitchen, pipes, tubes and fittings are likely to become cheaper due to the cut in tax on raw materials.
While announcing the Union Budget 2011-12, Finance Minister Pranab Mukherjee proposed full exemption of basic customs duty (BCD) on stainless steel scrap from the existing levy of 2.5 per cent. The minister also reduced BCD on ferro-nickel from the existing five per cent to 2.5 per cent.
The move is likely to benefit the rapidly growing stainless steel industry immensely, said N C Mathur, president of the apex trade body Indian Stainless Steel Development Association (ISSDA) and director of Jindal Steel.
Out of the total nearly 10 million tonnes of stainless steel scrap generated across the world, India imports merely 250,000 tonnes. Despite having immense potential for using even more scrap for meeting growing domestic demand, import was restricted until now due to high import duty.
Since quality scrap is not available in India, local scrap processing units use imported ones to produce stainless steel. Also, ferro nickel, a raw material for use in steel as well as stainless steel manufacturing, is also fully imported. Although, the government has taken half-hearted measure for cutting import duty on ferro nickel, it is a welcome move which will surely boost domestic industry, said Mathur.
A large number of units use between 50-60 per cent of imported scrap as raw material for stainless steel production. The reduction in import duty will enhance cash flow to these units, thereby, benefiting their topline and bottomline, said Mathur.
Most importantly, the recovery of nine per cent nickel and up to 18 per cent of chromium from imported stainless steel scrap would surely reduce overall cost of production as these metals entails high price in pure form. The budget also proposes full exemption of special additional duty (SAD) on copper dross, copper residues, copper oxide mill scale, brass dross and zinc ash. Apart from the that, BCD on vanadium pentoxide and vanadium sludge was reduced from 7.5 per cent to 2.5 per cent.