Tuesday, 29 November 2022

Government may cut duty on aluminum and steel in the upcoming union budget

Government may cut duty on aluminum and steel in the upcoming union budget

The government may consider decreasing import duties on products such as aluminum, steel, copper, and polymers in the budget to ease small and medium businesses, which have been hit stiff by burst input costs, two people well informed of the development said.

A vast understanding between the steel and finance ministries has been reached to review import duties on primary metals and bring them down and, in some cases, withdraw them thoroughly to help user industries, the people said,

An announcement on these is expected in the coming budget, they said.

The steel ministry did not reply to a query looking for comment, while a mail to the finance ministry didn't extract a reply.

The import duty on aluminum is 10%, while steel attracts 7.5% primary customs duty, polymers 10%, and copper 5%. The products also attract an 18% unified goods and services tax to offset local levies on the products.

The people said that the taxes may now be brought down further in the budget, with a particular category of metals and allied products getting the total exemption.

Government may cut duty on aluminum and steel in the upcoming union budget 1pixabay image

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In the year's budget, Nirmala Sitharaman finance minister withdrew the countervailing duty and anti-dumping duty on certain steel products while reducing customs duty constantly to 7.5% on semis, flat, and long products alloy non-alloy, and stainless steels from 10 to 12.5% levels before.

The Finance minister also cut the import duties to zero on steel scrap to support user industries hit stiff by a sharp rise in steel prices. The budget for the year starting 1st April is expected to cut duties further ahead.

Low import duties are expected to make it operational for small and medium businesses, staggering under the pressure of high costs, to import metals if local prices are high. The people said it would help restrict domestic metal producers from increasing prices to unusually high levels.

Domestic steel prices rose steeply since late last year when a pick up in economic activity post lifting the nationwide lockdown boosted demand. Steel prices also grew due to increased iron ore and coking coal prices globally. As a result, India's domestic benchmark hot-rolled coil prices have increased from ₹58,000 per tonne in April 2021 to extra than ₹72,000 per tonne presently. Though metal prices have eased a bit in December, they have primarily remained high, putting high pressure on user industries.

While small and medium industries seek duty cuts, metal producers want the government to raise duties, particularly aluminum, to prevent India from becoming a dumping ground for overseas producers saddled with high inventory levels.

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