India’s Steel Minister Mr. Dharmendra Pradhan announced that the government will come out with a white paper on steel industries in four months to reduce tax-related expenditure on steel companies and make them competitive. He said that the task will be completed in three-four months with the help of NITI Aayog and other ministries concerned.
Mr. Pradhan said “We are making our policy framework more inclusive. Our government has made raw material even more accessible to the secondary steel sector. The industry must reciprocate by producing more value-added products. India still imports high-quality steel and we have a large market with skilled workforce. We must create an ecosystem to develop more high-quality steel in the country and move towards becoming a net exporter.”
The white paper will focus on lessening the burden of taxes, cess and other duties on the local steel industry, besides studying the global models.
Recently, the issue of taxes in the steel sector was a part of a panel discussion on ‘India: Roadmap To A USD 5 Trillion Economy’. It was informed that the production cost of steel in India is the highest and taxes are one of the major factors contributing factors.
Royalty for the input material is close to 20 percent be it is coal or iron ore. Freight cost is also higher compared to that of other countries with electricity further adding to higher cost of production. As per industry estimates, the average production cost per tonne steel in India is about USD 450, whereas, in China, where players get the benefit of low tax and incentives, it is as low as USD 350.
Pradhan said the government is bringing changes to the Electricity Act which will address concerns related to power tariffs to bring in more relief. He also said the industry need not worry about raw materials as a number of mines will be auctioned post-March 2020 and interested parties are free to participate in the bidding process.
