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Steel Ministry has pitched for addressing the inverted duty structure in the upcoming Budget in a bid to protect the domestic industry, which is facing an onslaught of cheap imports and weak prices.
It has also asked the Finance Ministry to raise the peak duty rate from the present 15% to 25%, a senior government official said.
Read our full coverage on Union Budget 2016
Budget for the 2016-17 fiscal will be presented by Finance Minister Arun Jaitley in Parliament next week.
"Ministry has written to the Finance Ministry to re-look at the inverted duty structure, which is making import of raw materials such as coking coal, iron ore costly and is leading to an escalation in the operational costs of the steel firms," an official said.
The increase in input costs is adversely impacting the competitiveness of the domestic steel industry, which is already facing the issue of cheap imports, he added.
Another official said that customs duties levied on key raw materials such as coking coal, iron ore and metal scrap are higher than those on the end product and that most steel exporting countries do not impose import duties on raw materials.
"This is done to help the manufacturing sector and make it more competitive. The Ministry had pitched that the inverted duty structure needs to be reviewed in light of the global downturn and slowing demand in China, which is impacting industry here," the official added.
Another issue raised by the Steel Ministry is that of the peak customs duty.
If this is done, it will be the second consecutive increase in the peak rate. In the Budget for this fiscal, government had raised the peak customs duty from 10% to 15%.
"Even by raising the peak duty rate to 25 per cent, we are well below the threshold of 40 per cent allowed by the WTO," he added.
Earlier this month, in a bid to to protect the domestic steel industry, the government had imposed a minimum import price (MIP) on 173 steel products ranging between $341 to $752 per tonne. The minimum price will remain in place for six months only.
Domestic steel manufactures have been demanding fixing of the price as well as raising import duty in order to check cheap imports from countries like China, South Korea and Japan.
Besides, since July last year, the government has imposed provisional Safeguard Duty and increased import duty on certain steel products to check imports.
