The government could consider reducing import duties on products such as steel, aluminum, copper and polymers in the budget to relieve small and medium-sized businesses, which have been hit hard by soaring costs. inputs, said two people familiar with the development.

A broad agreement between the ministries of steel and finance has been reached to review and reduce import duties on major metals and in some cases remove them altogether to help user industries, the people said, on condition of anonymity.

An announcement on this is expected in the next budget, they said.

The Steel Ministry did not respond to a request for comment, while a letter to the Finance Ministry did not elicit a response.

The import duty on steel is 7.5%, while aluminum attracts a basic tariff of 10%, copper 5% and polymers 10%. In addition, all products are also subject to a built-in 18% tax on goods and services to offset local levies on products.

Taxes can now be lowered further in the budget, with a certain category of metals and related products enjoying full exemption, the people said.

In this year’s budget, Finance Minister Nirmala Sitharaman removed anti-dumping and countervailing duties on certain steel products while reducing tariffs uniformly to 7.5% on semi-finished, flat and long products in unalloyed, alloyed and stainless steels from 10 -12.5% ​​levels earlier.

It also reduced import duties on scrap steel to zero to support user industries hit hard by the sharp rise in steel prices. The budget for the year starting April 1 is expected to further reduce tariffs.

Lower import duties should allow small and medium-sized enterprises, under pressure from high input costs, to import metals if local prices are high. This would help prevent domestic metal producers from raising prices to abnormally high levels, the people said.

Domestic steel prices have risen sharply since late last year, when a rebound in economic activity after the national lockdown was lifted boosted demand. Steel prices have also increased due to higher prices for iron ore and coking coal globally. As a result, the benchmark prices for hot-rolled coils in the Indian market have increased from ??58,000 per tonne in April 2021 to more than ??72,000 per ton now. Although metal prices eased somewhat in December, they remained broadly high, putting pressure on user industries.

In its pre-budget memorandum submitted to the Ministry of Finance, the Federation of Micro and Small and Medium Enterprises of India (FISME) suggested removing import duties on steel, copper, aluminum and polymers. and suspend additional tariffs on the four commodities to curb prices.

“The prices of the building blocks of industrialization: steel, copper, aluminum and polymers on which millions of downstream industries / MSMEs depend remain 25-50% higher than their international counterparts,” said FISME in its pre-budget memorandum.

As small and medium industries demand tariff cuts, metal producers want government to increase tariffs, especially on aluminum, to prevent India from becoming a dumping ground for foreign producers struggling with low levels. high inventory.

To subscribe to Mint newsletters

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now !!


Source link