Steel products will cost less by up to Rs 1,600 a tonne with the government today announcing a four per cent cut in CENVAT (Central Value Added Tax) rate to boost demand of the commodity in the domestic market.
As a part of the stimulus package, the government today announced an across the board cut of four per cent in the ad-valorem CENVAT rate with immediate effect, for the remaining four months of the current fiscal.
Steel products are priced between Rs 28,000 a tonne and Rs 40,000 a tonne in the domestic market, depending upon the quality and value addition. The lowering of duty by four per cent would mean the product would get cheaper at least by Rs 1,000.
The domestic steel industry gave a thumbs up to the reduction in the CENVAT rate and said that benefits would be passed on to the end consumer.
"It is a welcome move. With the lowering of the excise duty steel prices will automatically get lower (stimulating more demand for the commodity)," country's largest steel producer SAIL Chairman S K Roongta said.
Domestic steel maker Ispat Industries Vice-Chairman and Managing Director Vinod Mittal said: "It is a positive step. End consumer will be benefited. Steel prices will come down by Rs 1,600 a tonne. The move, which will stimulate demand for the commodity in the market, will help in construction of low cost housing projects."
JSW Steel Group CFO Seshagiri Rao said: "Due to the cut, prices of our products will immediately get cheaper by up to Rs 1,500 a tonne. It is an across the board cut, auto industry and infrastructure will get the much needed stimulus."
However, with the cut, government is slated to lose about Rs 8,700 crore in revenue in the remaining part of the fiscal.
