The Indian Steel Association (ISA) has urged the Center to review the recent imposition of export duties on steel products. While the industry body welcomed the removal of import duties on key raw materials, it claimed the export duty could have a negative effect on new investment in building capacity steel industries with the Atmanirbhar Bharat Abhiyan for Steel.
ISA Secretary General Alok Sahay said CNBC-TV18 that it is not possible for prices to correct themselves because the cost of manufacturing steel is already very high due to the volatility of coal prices. The association has asked the Union government to examine the reasons for price volatility and the existing benchmark indexing systems that automatically change prices.
Jindal Steel & Power Limited Managing Director VR Sharma said CNBC-TV18 that the sudden imposition of export duties by the Center will force mills to cease export bookings, even though he wonders what will happen to orders taken or still in progress.
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While appreciating the government’s efforts to reduce inflation, he considered that steel prices are not responsible for global inflations and overdrafts from which various governments benefit. Highlighting nearly 2 million tonnes of steel orders in progress, for which letters of credit have been established or sales contracts have been signed, he said the impact of the duty will be borne by exporters.
Recalling that after pursuing the government’s target of $1 trillion in export earnings per year, the industry is now being asked not to export steel because with a 15% duty it will not be not a competitive proposition.
He explained that low grade iron ore is not required by Indian steel mills due to lack of beneficiation plants, hence banning iron ore as well as pellets is contradictory.
Suggesting that the imposed duty should be withdrawn, Sharma said that even if it remains, the industry should be given at least 3 months to reduce existing orders and supply taken orders. He asked the Center to look at Coal India’s production figures and try to increase coal production to at least 1,500 million tons per year instead of the existing 800 million tons, which will immediately bring down the price of all products in the product list.