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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.

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