Steel import duty may be raised

P Vaidyanathan Iyer & Sidhartha

The government is expected to announce a set of measures for the steel sector based on the recommendations of the high-level committee which has mooted an across-the-board hike in customs duty on steel products to the WTO-bound rate of 40 per cent and a reduction in the excise duty rate from 16 per cent to 8 per cent.

The committee comprising representatives from the steel companies, executives from financial institutions and officials from the steel and finance ministries, has also mooted a ban on the import of defective steel items or a floor price be put in place at the same level as prime grade hot-rolled coil imports.

Further, a floor price of $ 302 per ton should be put in place for minimum two years, the committee recommended.

It has suggested that the customs duty rate of 40 per cent should be put in place for a minimum three years. At present, HR coil attracts 25 per cent customs tariff while other steel products are levied 35 per cent import tariff.

It has also proposed that customs duty on scrap steel be raised from the existing 5 per cent to 25 per cent. The ship breaking industry should, however, be charged a concessional duty of 5 per cent on a reimbursable basis.

The panel has also proposed that the inputs on indigenous steel be exempted from the 4 per cent special additional duty.

Further, steel companies should get infrastructure status and bonds guaranteed by the Centre should be allowed to be issued.

Apart from a Buy India Act, the committee is of the opinion that PSUs and the government mandatorily procure steel from the domestic industry. A steel revival fund on the lines of the Technology Upgradation Fund for the textiles sector to make available credit at concessional rates has also been mooted.

An excise deferral scheme envisaging interest-free deferment on the duty has been proposed. The committee has said that steel companies should only pay half the excise duty and pay the remaining amount later, without payment of interest.

The deferred payment should be used for clearing the dues of the banks and financial institutions. The interest free loan should have a 15-year maturity period and should be repayable in 10 years with a five-year moratorium.

It should also be secured by a second charge on fixed assets of steel companies, the committee has said. A similar proposal has also found favour with the committee headed by Planning Commission member N K Singh.

Also, a scheme should be started for steel companies whereby the loss making ones with a certain level of income should be able to securitise their credits to the profit making firms, which can then use it reduce their tax liability, the committee suggested.

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