Nepal introduces excise duties on locally made steel in recent budget

Nepal's General Budget for 2023 reflects the government's strong commitment to national prosperity, poverty eradication, and sustainable development. While customs and excise duties on steel items remain unchanged, the government has introduced significant amendments in domestic excise duties. These changes aim to bolster domestic production, promote inclusivity, and support sustainable growth in the steel industry.

Changes in excise duties

In the 2023 Budget, the government has introduced adjustments in domestic excise duties on various steel items. The addition of NPR 1,800 in domestic excise for wire rod and high-carbon wire rod, along with an NPR 1,000 increase for torkari, and TMT, demonstrates a targeted approach to stimulate domestic growth of these steel products.

The steel industry plays a crucial role in infrastructure development, as steel is a vital component in the construction sector. By prioritising the growth of this industry, the government expects to stimulate infrastructure projects, attract investment, and contribute to the nation's economic progress.

Per capita steel consumption in this import-dependent country is around 35 kg with finished steel demand currently at almost 1.4 million tonnes per annum.

Sales to Nepal increased by over 83% to 0.64 mnt in FY'23 from 0.35 mnt in FY'22, boosting overall exports.

Nepalese mills have been finding it more viable to expand their melting capabilities by using sponge iron to make billets rather than importing the latter.

SteelMint notes that Nepal's steel melting capacity rose to over 2 mnt/year in 2022.

The country's mills have been increasing their melting capacities. As a result, these mills prefer to manufacture billets using sponge iron rather than importing the semi-finished steel product.