The Indian steel industry directly employs more than 5 lakh people and indirectly employs close to 20 lakh people.
Revision of export duty during Budget 2023 will help industry to overcome inflationary pressure
The steel industry has been one of the major contributors to India’s growth, mainly in infrastructure development. While the government is focusing on achieving $5 trillion economy by the financial year 2024-25, the fortunes of the steel industry look optimistic in the face of the recent volatility caused by the COVID-19 pandemic.
The Indian steel industry accounts for about 2 per cent of the GDP, while its diverse applications in various sectors make it a harbinger of economic activity. According to the National Steel Policy 2017, the Indian steel industry provides direct employment to more than 5 lakh people and indirect employment to close to 20 lakh.
Infrastructure – The Push Factor
The country is currently building an economic powerhouse driven by a national infrastructure pipeline with major initiatives such as ‘Housing for All’, ‘Smart Cities’, ‘Bharatmala’, ‘Sagarmala’, ‘Udaan’ (airports), freight corridors, highways, Looking at a transition on the side. Speed Rail and Metro Rail, among others. These factors indicated a strong demand for steel at a compound annual growth rate (CAGR) of 7 per cent to 7.5 per cent from the current financial year to 2025. The share of building and infrastructure construction alone in total steel consumption is currently pegged at 60 per cent. percent to 65 percent.
PLI scheme has huge investment potential
In line with the ‘Make in India’ policy to promote domestic manufacturing, the PLI scheme for manufacturing high-grade special steel will provide further incentives and benefits to both major integrated steel makers as well as downstream manufacturing MSMEs in the sector. it will bring India Domestic sourcing helps fill the gap in market demand while making products for export, at par with advanced steel-making countries such as South Korea and Japan. The PLI scheme has immense potential to attract more investment in the steel sector.
Steel Inclusion in RoDTEP
Steel is currently outside the purview of ‘The Remission of Duties and Taxes on Export Products (RoDTEP)’ scheme, which offers refunds against various embedded taxes to exporters in sectors such as automobiles and agricultural products. Recently India’s Ministry of Trade has attempted to extend an export promotion scheme for domestic steel producers to reimburse some local tariffs, which is a welcome move for the industry.
To enhance the competitiveness of the Indian steel industry, it will be important to focus on cost reduction in the supply chain, efficiency in logistics and reduction in financing costs. Digitization will provide value addition to the entire steel ecosystem with emphasis on sustainability. The interest of each stakeholder should be addressed with a focus on higher productivity, higher quality, lower cost and better plant health.
Budget 2023 – Industry’s Expectations
The industry is hopeful of removal of the export duty imposed earlier this year. The Russia-Ukraine conflict has opened doors for Indian steelmakers in the European market, but the imposition of export duties is a deterrent. Revision of export duty during Budget 2023 will help the industry to overcome inflationary pressure. This will be a welcome move for the industry as a whole as the industry players can tap the huge export potential.
About 90 per cent of the demand for steel mill rolls in India is met through imports, which currently attract a customs duty of 7.5 per cent. This also increases the cost of steel production and affects the competitiveness in the international markets.
Assocham in its ‘Pre Budget Memorandum’ has recommended complete exemption from custom duty on steel mill rolls. If approved, it will be of immense benefit to the industry. Also, zero import duty on stainless steel scrap will go a long way in reducing the carbon footprint. Rationalization of import duty on stainless steel flat products will be a right step towards ‘Atmanirbhar Bharat’ in stainless steel.
(The author is Chairman and Managing Director, Kamdhenu Limited)
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