Suffering from subdued demand and rising imports for quite sometime now, steelmakers have enough in the Budget to look for a better future.
Slashing of import duty on inputs, however, could have been the icing on the cake, say experts.
The proposal in Budget 2015-16 to raise spending on infrastructure by Rs 70,000 crore augurs well for the domestic steel firms which have been languishing due to poor demand, which grew just 0.6 per per cent last fiscal and 1.4 per cent in the first ten months of 2015-16.
"It is heartening that infrastructure sector initiatives have been given a major thrust, which will both spur the domestic demand and ease the supply side constraints with an increase of investment of Rs 70,000 crore in 2015-16 over 2014-15," said SAIL Chairman C S Verma.
Paying heed to the steelmakers' plea, Budget has created a possibility of increasing the import duty for finished and semi-finished steels to 15 per cent from 10 per cent, aimed at protecting the home-grown firms from rising imports.
Steel and Mines Minister Narendra Singh Tomar welcomed the step. During the April-December period of current fiscal, steel imports to India went up by a whopping 58.1 per cent to 6.51 MT over the same period last year.
"Swamped by a supply glut of cheap steel from nations like China, Russia and Korea, the proposal to hike the import duty on steel comes to the industry as a relief," said Ravi Uppal, MD and Group CEO of Jindal Steel and Power Ltd.
JSW Steel's Commercial Director said the industry would really reap benefit if the "enabling proposal" turned into a "concrete action" quickly given the importance of the sector which has a direct bearing on the growth of the economy.
In another positive move for the industry, Jaitley also halved Special Additional Duty on melting scrap of iron ore and steel including stainless steel scrap for melting, copper scrap, brass crap and aluminium scrap to two per cent.
"As far as steel industry is concerned, Budget has little to offer directly barring a marginal rise in import duty on import duty of steel and reduction in import duty to 2 per cent on scrap," said Essar Steel's CEO and MD Dilip Oommen.
Rajiv Rajvanshi, Sr Vice President (Corporate Strategy), Jindal Sainless rued that no immediate relief was provided to the sector which is reeling under huge surge in imports mainly from China.
"We had hoped that keeping in view large scale dumping taking place, Basic Custom Duty on finished stainless steel products would have been increased and duty on input material like stainless steel scrap and nickel would have been done away with," he added.
There are some negatives for the steel industry as well. The doubling of import duty on metcoke to 5 per cent would hurt the steel industry, now struggling due to subdued demand rising imports.
Again doubling the clean energy cess on coal to Rs 200 per tonne has dealt a double blow as it comes on top of the 6.3 per cent hike on coal freight announced in Rail Budget, said Uppal.
Maintaining status quo on the imports of raw material such as iron ore and coking coal is also a big disappointment of the industry. Steelmakers have been asking for abolishing 2.5 per cent duty levied on these key inputs alleging a huge shortage domestically.
