The Indian government is considering tweaking the tax regime for the steel sector, with an announcement expected very soon, sources in government and industry said on Tuesday, July 12.
The sources said that, following a series of meetings with the domestic steel industry, including the main industry body, the Indian Steel Association (ISA), over the past couple of weeks, the government has acknowledged the need to change the tax regime, including the changes made in levies in late May.
According to the sources, the new changes in taxes will be based on the rationale of having higher export taxes on raw materials to conserve and ensure higher domestic supplies, and bring down the levies on steel exports.
The sources said that the 15 percent export tax which currently covers 95 percent of steel products exported from the country could either be reduced sharply or abolished in case of flat steel products, but maintained in the case of exports of rebar and wire rods.
At the other end on the raw material front, the export tax of 50 percent on iron ore and concentrates, increased recently from 30 percent, could be pushed up even higher to ensure higher volume availability at lower prices for domestic mills, the sources said.
They said that, since Indian mills were exposed to the highly competitive Asian and Southeast Asian steel markets, the 15 percent export tax had resulted in a 53 percent decline in steel exports in June and the continuation of the levy would force most exporters to vacate these destinations and, with the government acknowledging the same, the levy imposed in May could be completely withdrawn.
