India’s Ministry of Commerce has mooted fresh import barriers in the form of a Border Adjustment Tax (BAT) on some imports including steel, to offset incidence of some domestic tax that makes local production un-competitive vis-à-vis imports, a government official said on Monday, December 16.
The official said that the proposal for the BAT has been forwarded to the Ministry of Finance and the basic concept of such a levy has been agreed by the government and the final rate would be decided and given effect in the national budget for 2020-21 scheduled to be presented before India’s parliament in February 2020.
There are several products which have attracted additional cess tax over and above the Goods and Services Tax (GST) which increased the cost of domestic production, and the proposed BAT would ‘level the playing field’ between domestic cost of production and imports.
Citing an example, he said that steel producers had to bear the burden of INR 400/mt ($6/mt) as a clean energy cess tax on coking coal. With coking coal accounting for around 40 percent of the domestic cost of steel production, the cess burden entails additional costs for local steel producers and the proposed BAT would offer protection to domestic producers from competition from cheaper imports, the official added.