The Indian Steel Association (ISA) has urged the Centre to review the recent imposition of export duty on steel products. While the industry body welcomed the removal of import duties on key raw materials, it claimed that the export duty may adversely affect fresh investments in creation of steel capacity along with the Atmanirbhar Bharat Abhiyan for Steel.
ISA’s Secretary General Alok Sahay told CNBC-TV18 that it isn’t possible for prices to correct as the cost of making steel is already very high due to volatility in coal prices. The association has requested the Union Government to look at reasons behind price volatility and the existing benchmark indexation systems which automatically change price.
The Jindal Steel & Power Limited's Managing Director VR Sharma told CNBC-TV18 that the sudden imposition of export duty by the Centre will force steel mills to stop export bookings, even as he questioned what will happen to the orders taken or still in the pipeline.
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While appreciating the government’s efforts to reduce inflation, he opined that steel prices aren’t culprit behind worldwide inflations and overdrafts availed by different governments. Pointing to nearly 2 million tonnes of steel orders in the pipeline, where either LCs have been established or the sales contracts have been signed, he said that impact of the duty will be borne by exporters.
Reminding that from chasing the government’s target of USD 1 trillion of export revenue per year, the industry is now being asked not to export steel because with a 15 percent duty it won’t be a competitive proposition.
Pointing to the confusion created by the government’s orders, he stated that on one hand the steel industry was being encouraged by a
PLI scheme to expand capacities, while on the other hand exports are being discouraged.
He explained that low-grade iron ore isn’t required by Indian steel mills due to lack of beneficiation plants, hence banning iron ore as well as pellets is contradictory to each other.
Suggesting that the imposed duty should be withdrawn, Sharma said that even if it remains, the industry should be given at least 3 months to taper off existing orders and supply the orders taken. He requested the Centre to look into Coal India’s production numbers and try increasing the coal output to at least 1500 million tonnes per year instead of the existing 800 million tonnes, which will immediately cool down prices of all of commodities across the product list.
