Business Standard

Core impetus to give much-needed fillip

STEEL

Image

Team BS Mumbai
New infrastructure projects will definitely boost demand but alloy steel firms hit by duty on imported steel scrap.
 
While the steel industry has welcomed the duty cuts provided in the Union Budget, alloy steel producers (non-ferrous) are expecting cost of production to go up, despite a duty cut to 7.5 per cent from 10 per cent.
 
"Overall, it's a favourable Budget for the steel industry. Domestic alloy steel producers, however, could be adversely affected. One, import duty on alloy steel is down, thus lowering protection for domestic producers. Further, with the 5 per cent duty on imported steel scrap, the cost of production for alloy steel ought to go up," said A S Firoz, chief economist, Joint Plant Committee.
 
V S Jain, chairman, Steel Authority of India Ltd, said the new infrastructure projects announced in this Budget should boost the demand for steel sector.
 
"The new deep draft port in West Bengal would help reduce the freight cost of imported coal," he said.
 
The finance minister has reduced the duty on alloy steel and primary and secondary non-ferrous metals from 10 per cent to 7.5 per cent.
 
This will also be the rate of duty for ferro alloys. Import duty on steel melting scrap has been restored to 5 per cent which was in 2004-05 brought to zero duty level.
 
The duty on mineral products has been reduced to 5 per cent from 15 per cent, with a few exceptions. Further duty on ores and concentrates have been reduced to 2 per cent from 5 per cent.
 
With import duty of scrap steel moving up to 5 per cent, domestic sponge iron manufacturers are expected to benefit. Sponge iron is used as a substitute for imported scrap steel.

 

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Mar 01 2006 | 12:00 AM IST

Explore News