Budget Impact on Steel Sector
Overall impact: Moderately Positive
Custom
Duty
To provide succour to the
beleaguered steel industry customs duty on a number of refractory raw materials
has been reduced by 10%. The Finance Minister, besides fulfilling a key demand
of the industry, has made steel manufacturers more cost-competitive. The list
of raw materials on which customs duty has been reduced is given below.
Product
Customs
(Basic)
2001-02
2002-03
Natural graphite
powder
35%
25%
Andalusite
25%
15%
Fused
mullite 25% 15%
25%
15%
Aluminous
cement
35%
25%
Silicon
metal (99% purity)
35%
25%
Micro/Fumed
Silica
35%
25%
Calcined
alumina
35%
25%
Brown
fused alumina
35%
25%
Sintered/Tabular
alumina
35%
25%
Fused
zirconia
35%
25%
Sodium
hexametaphosphate
35%
25%
Silicon
carbide
35%
25%
Boron
carbide
35%
25%
Reactive
alumina
35%
25%
Low
silica limestone (less than 0.6% silica content)
25%
15%
Graphite
electrodes (above 24 inches)
25%
15%
Ships imported for breaking are currently charged
customs duty at 5% along with CVD of 16% and SAD of 4% with effective rate
being 26.67%. This basic duty on ships for breaking has been increased from
5% to 15% and exempted from the CVD and SAD.
Customs duty on metcoke imported by corex technology
based steel plants has been reduced from 15% to 5%.
Customs duty on HRGO/HRNGO has been reduced
from the existing 35% to 25%.
Hot Rolled Stainless Steel coils for coin blanks
have been exempted from customs duty.
Excise Duty
No major changes
Other Changes
The industry has significant transportation
cost and is likely to be benefited if the reduction in petrol and diesel costs
is passed on by way of reduced transportation tariff.
The Government's focus on infrastructure development
continued with total plan outlay in power, roads and railways increased by
22%, 39% and 23% respectively, to a total of Rs 379.19 bn. Moreover, an Infrastructure
Equity Fund of Rs. 10 bn will be set up to help in providing equity investment
for infrastructure projects. Implementation of these projects should lead
to increased demand for steel.