White Paper to Reduce Tax Burden on Steel Sector

All India Furnace Association (AIFA) organised AIIFA's 33 National Conference on 23rd Dec'19 in New Delhi. The objective of the conference was to discuss "Most advantageous route of environment friendly steel making through Electric Induction Furnace (EIF) and its global acceptance". The event was attended by industry stalwarts including Shri Dharmendra Pradhan, Hon'ble Union Minister of Steel & Petroleum and Natural Gas, Govt. of India and Shri Faggan Singh Kulaste, Hon'ble Minister of State for Steel. SteelMint also attended the event and the key takeaways are mentioned below :

White paper to reduce the tax burden on steel sector - Shri Dharmendra Pradhan mentioned that the govt. will soon come out with a white paper on steel industry that will focus on ways to reduce the tax related expenditure in the sector and make it competitive.

One nation one tariff- The association has urged ministry that there should be rationalize power tariff, so that input cost comes down, which is quite high than the current selling price of products. It was also highlighted that power charges are high for industrial consumption than for domestic consumers.

Custom duty on scrap should be removed to improve availability- To reduce cost & make quality steel, more scrap needs to be melt, however due to high duties along with significant hike in scrap prices the manufacturers are unable to buy/melt scrap. Hence for better availability at competitive price, the members have demanded govt to remove custom duty on imported scrap which is currently at 2.5%.

Regarding imposition of export duty on pellets- The manufacturers have further expressed their concerns on raw material cost, thus also said ministry should come out with export duties on raw material export. As per them despite heavy production of pellets along with iron ore availability, the prices are rigorously on rising mode, this is ultimately raising cost of sponge makers and passing it to final products manufacturers. If the export duty comes in place, this will benefit to across log of steel manufacturers. So their books can be maintained healthy.

R&D promotion may help fight issues related to pollution- It was also demanded that government should settle some R & D rather to blame steel industries to close their operations. Once the research institutes come out, the pollution levels will ultimately come down. This issue has been raised on account of recent close industries in NCR region along with neighboring states in northern India.

Regarding BIS standards- The furnaces have highlighted how to make quality steel if the sponge iron come with high sulphur & phosphorus. The secondary steel makers produce about 55%, in which 80-85% are produced through the sponge iron. So if the sponge iron comes of better quality, it will reflect on final products which could be come under BIS.

It should be noted that recently government has made it compulsory to make quality steel on 66 steel products , which are about 85-90% of steel products in India.

In response to the demand, the ministry has assured that -

-- Inline to reduce cost of power tariff the ministry has advised manufacturers to raise this concern to the state government as their are partially where small consumer are getting rebates even free tariff, whereas industries are poised with high tariff.

Also, it was assured that government looking other energy sources to reduce making cost of steel.

Steel cluster policy-- It was said by ministry department that, to cut down cost and achieve target of 300 MnT steel production in India. Its based on the principle of availability of raw material,logistics support and proximity to demand centers with the vision to create a model ecosystem for steel manufacturing through world class steel clusters and to promote self-sufficiency,drive cost competitiveness and generate employment opportunities.

Inline to improve availability of iron ore at competitive price, in Sept'19, Indian government took a decisive step in assuring supply of raw material to steel sector by allowing Steel Authority of India Ltd (SAIL) to sell 25% of its total annual mineral production in merchant market. This was in order to avoid any kind of possible disruption that may occur because of mining auction due on March 2020. Government of India has also given permission to sell 70 MnT of sub grade minerals in the captive mines of SAIL (Steel Authority of India Ltd) This would enable SAIL to lead the way in ensuring availability of iron ore in the years up ahead for the steel sector.