With a view to revive the ailing steel industry and incorporate the investments made in India’s steel sector, apex industry body ASSOCHAM today reiterated its stand to exempt iron ore imports from Basic Custom Duty (BCD) and Countervailing Duty (CVD) as has been in case of other minerals like coal.
“Import of finished steel products in India from South Korea, Japan and other countries from ASEAN (Association of South East Asian Nations) land at high concessional duty rates as compared to normal duty rates from other countries thereby making Indian steel products cheaper and pushing the sector in peril,” said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication to the finance secretary (Economic Affairs Division), Dr. Arvind Mayaram.
Considering there has been no mention of issues vis-à-vis removal of import duty on iron ore and its impact on the domestic steel industry in the Union Budget 2013-14, ASSOCHAM has urged the government to revisit this “Inverted” duty rate between finished steel and iron ore which is denying an opportunity to the steel sector for value addition apart from risking huge funds invested by various banks and financial institutions thereby leading to job losses and downfall in investments in Indian steel industry.
“Non-availability of iron ore arising out of a tighter regulatory regime and various government impositions to weed out illegalities from iron ore mining sector is further stressing the steel production in India,” said Mr D.S. Rawat, secretary general of ASSOCHAM.
“Though steel sector has been growing at the stipulated rate but in recent past the growth has received a major jerk because of the recent shortage of iron ore and as a result major investment proposals of leading domestic and global steel industry players have been halted because of non-assurance of committed supply of iron ore,” said Mr Rawat.
Despite risks like fluctuating FOB prices of iron ore with demand-supply matrix in international arena, some steel industry players are seriously scouting for long term agreements for their plants survival and many have already imported cargo as test shipments and the cost of the imported cargo is exorbitantly high.
In its letter, ASSOCHAM has also mentioned that some players are also resorting to acquisition of iron ore mining assets abroad which is throwing them to another basket of risk i.e. host country regulatory risk.