Other measures will have an indirect positive impact.
The finance minister has proposed a partial roll back of the rate of reduction in excise duty, enhancing the standard rate on all non-petroleum products from 8 to 10 per cent, which will immediately translate into an increase in prices for the steel sector.
Steel prices are expected to increase by Rs 600-800 a tonne with immediate effect. Anil Sureka, director-finance, Ispat Industries said, it would be a pass-through and prices would automatically increase. Prices of hot rolled coil (HRC) — a benchmark for flat steel used in the automotive and consumer durables sectors — which are ruling at around Rs 30,000 were expected to increase by Rs 600 a tonne.
This would be an additional increase for consumers, who were likely to face more rise in the coming months on account of raw material price increase.
Neeraj Singal, managing director, Bhushan Steel, said, the industry would also pass on the clean energy cess levied on coal produced in India.
The finance minister has proposed a cess of Rs 50 a tonne to be levied on coal produced in India as well as imported coal.
Singal said, the demand in India was strong and steel was in short supply. “It will not be a problem to pass on the cess to the consumer,” he said.
Vikram Amin, executive director, Essar Steel, said, the focus on infrastructure spending, allocation of funds for railways and highways, emphasis on power sector growth and the focus on rural and urban development augured well for the steel industry.
The finance minister has proposed a 75 per cent increase in urban development allocation. Around 46 per cent of total plan allocation is accounted for physical infrastructure like roads, ports, airways and railways.
Sureka said the measures would go a long way in having an indirect positive impact on the steel industry.
“The demand in the country is already high, this will further boost the demand for steel,” he said.
The industry is a net importer. During April-December 2009, HRC sheet imports were at 2.59 million tonnes compared to 1.59 million tonnes, while total imports stood at 4.3 million tonnes.
