In its bid to protect the domestic steel industry from imports of cheaper steel into the country, the government on Wednesday increased the customs duty on certain steel products by 2.5 per cent. The domestic industry is currently battling sluggish markets and squeezed margins.
In a notification, the finance ministry said basic customs duty on imports of flat steel products has been raised to 10 per cent from currently 7.5 per cent and 7.5 per cent from 5.5 per cent for long steel products. The domestic steel companies has been campaigning against cheaper Chinese steel imports flooding the local markets and eating into their margins despite most of them in the midst of capacity expansion programmes.
The steel ministry under Narendra Singh Tomar too has been pressing the finance ministry to impose financial curbs to discourage imports. Tomar last week told The Indian Express that he had already raised the issue of curbing steel imports with finance minister Arun Jaitley. He led a delegation of major steel companies’ CEOs to meet Jaitley on June 2.
Jaitley had hiked import duty on certain steel products and also kept peak custom duty hike to 15 per cent as an enabling provision for the future in the General Budget 2015-16. For the past one month senior officials from finance and steel ministries have been interacting on whether to impose a safeguard duty or increase the basic custom duty to contain steel imports.
Justifying the increase in the customs duty, Tomar said it would boost the government’s ‘Make in India’ programme and would provide much needed relief to the domestic steel industry.
Between April 2014 and January 31, this year the country imported 8.38 million tonne (MT) of steel of which 2.9 MT was from China alone against 1.08 MT in 2013-14.