Steel Majors To Gain From 4% Duty Cut
The government’s move to across-the-board cut of 4% in the ad valorem Cenvat rate, which will be effected for the balance part of the current fiscal on all products other than petroleum, is surely going to benefit the construction grade steel like TMT and structural steels, made by Steel Authority of India Ltd, Rashtriya Ispat Nigam Ltd and Tata Steel.
The major sop for the iron ore producers is the elimination of 8% export duty on export of fines and reducing the current 15% ad valorem export duty on lumps to 5%. The move has come as a major relief for the producers, since 86% of iron ore export consists of fines. As of now, the producers are hoping that exports in the current fiscal would be around last fiscal’s level of 104 million tonne. Prior to this, the estimate was of around 80-85 mt.
As of now, 14% of excise duty is attracted by the Steel products, which will now fall down to 10%. The benefit would be restricted to long products like TMT and structural steel, which are used in the construction sector and are currently not modvatable, since most products are modvatable—where excise refund is given to the manufacturers for value addition.