In its pre-Budget memorandum, the Sponge Iron Manufacturers Association (SIMA) urged government to discourage huge import of steel scrap, which is killing Indian sponge iron industry.
The association wants the government raise basic customs duty on steel melting scrap from 0 to 10 per cent in Budget 2013 to discourage its import.
The memorandum said the industry is already burdened with the rising cost and restricted availability of inputs like iron ore, non coking coal and natural gas. The record import of steel melting scrap in current financial year from April 2012 to January 2013 has affected the industry further, it said.
India’s import of scrap may touch around 8 million tonne in the current financial year leading to valuable foreign exchange outgo of the order of about $3.5 – 4 billion and will therefore contribute significantly in the much talked current account deficit (CAD), it said.
The reasons for this substantial increase in the import of steel melting scrap may be attributed to steel production is not matching to demand, no greenfield steel plants coming up in the country and zero customs duty on steel melting scrap.
In order to address iron ore shortage, the association suggested the government to correct the import duty & inverted structure of duty (excessive duty on import of raw material rather than on FG).
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