Export tariff hike on steel items hurts PLI projects, industry body says

Imposing export tariffs on steel products would send a negative signal to investors and adversely affect capacity expansion projects under the PLI scheme, with steel industry players saying the government has lifted tariffs on raw materials and increased export taxes to check local prices.

The government on Saturday waived tariffs on imports of some raw materials used by the steel industry, including coking coal and ferronicle, a move that would reduce costs and reduce prices for the domestic industry.

Also, to increase domestic availability, tariffs on iron ore exports were increased to 50 per cent and on some steel intermediaries to 15 per cent, according to a notification.

In a statement, the Indian Steel Association (ISA), an association of steelmakers, said the industry welcomed the removal of import duties on coking coal and several other input raw materials for the industry.

However, the imposition of export duty on steel would only send a negative signal to investors in the steel sector and adversely affect the utilization of the sector’s potential. India has been increasing its engineering and steel exports for the past two years and is likely to be part of a larger global supply chain.

“India may now lose its export opportunities and this decision may affect the country’s overall economic activity,” the association said.

Also, the imposition of export tariffs will help other countries to increase their share in the world market, which will empty India. Recovering lost ground could take a long time, as the supply chain would be disrupted, while India’s credibility as a reliable exporter would suffer, the ISA noted.

The steel industry in India has pledged the largest investment of 36 per cent to 40 per cent of the total investment pledged by the entire manufacturing sector.

“In light of this decision, the creation of new capabilities could have an impact as they would be seen as unsustainable thus affecting the much awaited investment against the PLI scheme for special steel.” It could also have a big impact on the entire supply chain in the long run. The economic activities of some of the mineral and steel dependent states will be further affected.

“These measures need to be considered and then a hierarchical approach can be taken. The steel industry remains committed to nation-building, ”the association said.

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