Budget 2011: Raise Import Duty On HR Coils By 5%, Says ASSOCHAM.

NEW DELHI: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in has stressed upon raising the import duty on Hot Rolled Coils (HR Coils) from prevalent 5% to minimum 10% to encourage the growth of domestic steel industry.

ASSOCHAM feels that pro-active policy measures adopted by Government of India can help expand the HR Coil capacity by additional 8 million ton during 2011-12, making India surplus for HR Coils by more than 6 million ton.

In a proposal to the Ministry of Finance, ASSOCHAM has urged the government to raise import duty on HR Coils minimum by 5%. It is imperative to mention that India used to be a net exporter of HR Coils during the last decade but it has become a net-importer since past 5 years and has already imported around 2 million ton of HR Coils in the current financial year. China along with CIS (Commonwealth Independent States) account for almost 75% of total imports.

ASSOCHAM has pointed out that excess capacity coupled with cost competitiveness are fundamental reasons for export of primary input raw materials for manufacturing steel i.e. iron ore, coking coal. Coking coal contributes approximately 50% of total cost while 20% cost is contributed by iron ore.

Countries like China and CIS with excessive raw material resources are cost-competitive in the international market. China stimulates exports by giving an export incentive of 9% on HR Coils, on the contrary coking coal pries have increased by over 100% thereby, pressurizing cost-competence of Indian steel producers.

ASSOCHAM has also outlined four fundamental factors that present adverse scenario for Indian steel companies producing HR Coils - excess capacities in China and CIS countries, cost competitiveness due to cheap source of raw material esp. coking coal, 9 %incentive given to Chinese exporters, new HR Coil capacities developing in India.

Source : economictimes.indiatimes.com