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Run up to the Budget: Steel sector
Key Inputs
Iron Ore, Nickel Oxide, Alloyed
and Unalloyed Nickel, Ferro Nickel, Power, Coal etc.
Key Outputs
Steel Structurals, Bars & Rods,
HR Coils/Skelp, HR/CR Sheets & coils, GP/GC Sheets, Finished Steel, etc
Duty Structure
|
PRODUCT
|
Customs (%)
|
Excise*
|
| |
Basic
|
Surcharge
|
CVD
|
SADD
|
(%)
|
|
Pig Iron
|
15
|
1.5
|
16
|
4
|
16
|
|
Ferro Alloys
|
25
|
2.5
|
16
|
4
|
16
|
|
Ferro Nickel
|
5
|
0.5
|
16
|
4
|
16
|
|
Re-melting Scrap
|
35
|
3.5
|
16
|
4
|
16
|
|
Re-melting Scrap - Seconds
|
25
|
2.5
|
16
|
4
|
16
|
|
HBI & Sponge Iron
|
25
|
2.5
|
16
|
4
|
16
|
|
Bars & Rods
|
35
|
3.5
|
16
|
4
|
16
|
|
HR Coils/Skelps
|
35
|
3.5
|
16
|
4
|
16
|
|
HR Sheets
|
35
|
3.5
|
16
|
4
|
16
|
|
HRC < 500mm Width
|
25
|
2.5
|
16
|
4
|
16
|
|
CR Sheets/Coils
|
35
|
3.5
|
16
|
4
|
16
|
|
GP/GC Sheets
|
35
|
3.5
|
16
|
4
|
16
|
|
Finished Steel
|
35
|
3.5
|
16
|
4
|
16
|
|
Billets, Blooms <6% Carbon
|
25
|
2.5
|
16
|
4
|
16
|
|
Stainless Steel Slabs
|
25
|
2.5
|
16
|
4
|
16
|
|
Iron ore
|
15
|
1.5
|
NIL
|
4
|
**
|
|
Coking Coal <12% ash
|
5
|
0.5
|
NIL
|
4
|
***
|
|
Coking Coal >12% ash
|
15
|
1.5
|
NIL
|
4
|
***
|
|
*Excise on Stainless Pattis and Pattas is levied on compounded duty basis
at
|
|
Rs 15,000 per cold rolling machine per month.
|
|
**Re 1 per metric ton
|
|
***Rs 4.25 per metric ton
|
Background
- Total production of finished steel stood at
22.15 mn tons during Apr-Dec 00 against 99.77 mn tons in Apr-Dec 99, representing
a growth of 12%.
- However, total production of pig iron during
this period has been only 2.32 mn tons as against 2.37 mn tons in the corresponding
period of the previous year. The export of finished steel and semis in Apr-Dec
00 has been estimated at 2.3 mn tons, witnessing an increase of 2.5 % over
the corresponding period of the previous year.
- The global steel industry is witnessing a slowdown.
During the year 2000 global steel consumption grew by an estimated 5.8% whereas
the same for US grew rose 3.8%.
- The slow down in USA is likely to have a negative
impact on domestic steel exports. India's steel exports to USA account for
32.6% of domestic Iron & Steel exports.
- Many of the steel products have already been
removed from Quantitative Restrictions (QRs) list in Apr 00. The remaining
80 steel items will also be removed by April 01 This can inundate the Indian
market with cheaper Iron & Steel products.
|
Production Statistics: Apr- Dec 00
Figures in '000 tons
|
|
|
Bars & Rods
|
HR Sheets
|
CR Sheets/
Coils
|
GP/GC
Sheets
|
Finished Steel |
|
Apr-00
|
746.20
|
34.00
|
307.00
|
106.00
|
2,306
|
|
May-00
|
728.60
|
39.00
|
338.30
|
132.55
|
2,379
|
|
Jun-00
|
723.60
|
48.70
|
325.10
|
136.30
|
2,259
|
|
Jul-00
|
787.20
|
44.00
|
335.00
|
124.20
|
2,255
|
|
Aug-00
|
766.60
|
46.70
|
315.90
|
119.90
|
2,440
|
|
Sep-00
|
787.00
|
37.20
|
348.80
|
134.70
|
2,501
|
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Oct-00
|
723.40
|
42.90
|
344.10
|
124.30
|
2,319
|
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Nov-00
|
730.10
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39.00
|
351.60
|
130.90
|
2,428
|
|
Dec-00
|
728.00
|
36.00
|
335.00
|
129.00
|
2,369
|
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TOTAL
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6,720.70
|
367.50
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3,000.80
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1,137.85
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21,256
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Previous year (FY 2000-01) budget announcements
- Induction furnaces and re-rollers were brought
under Ad-Valorem CENVAT at 16% (with modvat benefit) in place of the previously
existing compounded levy.
- Integrated steel plants were allowed to pay
duty at the ex-factory price on steel sold from their depots instead of the
depot price which included freight costs. As a consequence the excise burden
was marginally reduced.
Industry demands from the
current year's budget
- Supplies of Indian steel to projects/industries
enjoying concessional duty under project import condition should be treated
as deemed export so that the industry can avail of deemed export benefits.
- The customs duty on ship breaking scrap should
be raised to 25 %.
- Allow concessional rate of 8 % excise duty for
construction steel, GC sheets, since the steel used in construction does not
enjoy MODVAT benefits.
- Indigenous industry should be allowed to compete
at par and deemed export status should be granted to coin blanks for supplies
to Indian units.
- Customs duty on non-coking coal with below 12%
ash content used for metallurgical purposes should be reduced from 25 % to
5 %.
- Additional duty equivalent to excise duty, which
is 25 % at present, should be imposed on import of ferro alloys from Bhutan.
- Excise duty on ferro alloy slag, presently at
8 %, should be waived, as it has no commercial value.
Expectations
Considering the rehabilitation
requirement in Gujarat, the Government is likely to provide sops in excise duty
on the steel used for construction purposes in earthquake hit areas of Gujarat.
Key Players
Steel Authority of India, Essar Steel, Tata Iron
and Steel, Jindal Iron & Steel, Jindal Vijaynagar Steels, Jindal Strips,
Mahindra Ugine Steel, Mukand, Electrosteel Castings, Ispat Industries, Sesa
Goa, Tata SSL.
Rediff-Dun & Bradstreet Budget Impact Analysis
Budget 2001
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