Budget 2021: Reduced Import Duty On Steel Unlikely To Affect Indian Firms
The government’s move to cut duties on specific steel imports won't impact domestic makers of the alloy much.
Finance Minister Nirmala Sitharaman, in her Budget 2021 speech, proposed to reduce customs duty on imports of semi-flat steel—used to make ships, bridges, line pipes and other equipment—from 12.5% to 7.5%. The government also cut customs duty on longs, used to make rails and wire rods, from 10% to 7.5%.
The move won’t have a major bearing on Indian steel firms, according to Vishal Chandak, analyst at Emkay Global Financial Services. Nearly 70% of India’s steel imports are from countries with which it has free-trade agreements—and hence attract zero customs duty, he said.
Amit Dixit, assistant vice president-research at Edelweiss Securities, said the steel sector was expecting more measures that would have had a negative impact. Since longs aren’t imported, the issue of customs duty isn’t relevant and in the case of flats, the duty is relevant for imports only from countries that don’t have FTAs with India, he said.
Long steel imports from such countries, he said, would be cheaper by around Rs 2,200 per tonne at existing rates and by nearly Rs 1,560 per tonne while considering prices over the last seven-year cycle.