The government has waived basic custom duty on nickel -- a key steel making raw material -- in a major relief to the steel industry which is facing tough times.
The basic custom duty on nickel has come down to nil from 2.5 per cent earlier, according to the Budget document.
Ajani K Agarwal, partner and national leader (Metal and Mining sector) EY said that bringing down the basic customs duty (BCD) on nickel to zero from 2.5 per cent comes as a great relief for the stainless steel industry which has been facing challenging times.
"We welcome the move as it will be helpful for the domestic stainless steel industry as they are facing huge challenge of imports. This reduction of BCD on nickel will be mildly positive for domestic industry," he said.
Though the percentage of the stainless steel industry in in the country is small, he said.
Nickel is primarily used in the manufacturing of stainless steel. Jindal Stainless is one of the leading stainless steel producer in India.
The Steel Ministry had earlier written to the Finance Ministry, seeking reduction in import duty on nickel.
Agarwal further said that the reduction of BCD on CRGO steel will help in reduction of the cost of power transformers.
In the budget, the basic customs duty on "MgO coated cold rolled steel coils for use in manufacture of CRGO steel" has been reduced from 10 per cent to 5 per cent.
He further said that the reduction of BCD on Hot Rolled Coils for captive use in welded tubes and pipes would create price pressure on domestic HR coil producer.
In the budget, the government reduced the BCD on "Hot Rolled Coils, when imported for use in manufacture of welded tubes and pipes" from 12.5 per cent to 10 per cent.
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The government, Agarwal, said has created an enabling provision to impose export duty on 'aluminium ores including laterite from 0 per cent to 30 per cent . However, the actual levy imposed is 15 per cent from earlier zero per cent. This is purported to be a measure to 'conserve' domestic resources.
The rationale for imposing this duty may not be fully explained as there is already an export duty of 15 per cent on bauxite, he said.
The metallurgical grade of bauxite is used in producing aluminium metal and given large scale import of aluminium from countries like China, a duty on export of bauxite/alumina was understood.
However, laterite etc. Being a low grade materials, extending export duty thereon may be deemed to be unwarranted and will be challenging for their miners mostly in Maharashtra and Gujarat, he added.
The government had earlier said that it was considering imposing a minimum import price (MIP) on aluminium, a move that may help stem a rise in cheaper shipments coming from overseas, hurting domestic manufacturers.
China, the biggest producer and consumer of metals, is exporting surplus aluminium amid weak domestic demand.
