The government’s move to protect domestic steel industry through increased import duty has upset the engineering industry. It has since demanded that the duty drawback rates be increased by 60 per cent.
If this is not done, then “engineering exports this fiscal may miss the target,” EEPC India Chairman Anupam Shah said.
The government has hiked the import duty on flat products of steel, from 7.5 per cent to 10 per cent. Likewise, on long products such as TMT bars, the levy has been raised to 7.5 per cent from five per cent.
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“We are not against support to the domestic industry against imports from countries such as China, but then, with the domestic prices being influenced by such levies, the drawback rates should simultaneously go up,” Mr. Shah said.
The current duty drawback is around 1.9 per cent. And, it should be increased by 60 per cent of the import duty hike.
Since steel accounts for about 50 per cent of total value of engineering products, the duty drawback rates for engineering products should have been raised by 1.25 per cent at the bare minimum, the EEPC said.
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It may be mentioned that iron and steel is freely importable, but over the years, there has been an increase in imports of finished steel from 6.67 million tonnes in 2010-11 to 9.32 million tonnes in 2014-15, according to Union Steel Ministry data. Not only industry but even lenders had pressed for a hike in import duty saying that the imports were hurting domestic industry.
The EEPC claimed that imports constituted only 10.7 per cent of total production. But, if imports were curtailed through duties, the user industries would be completely at the mercy of the domestic steel industry, it said.