M Venkata Chary, Visakhapatnam

Excise Duty on steel products should not be increased
It is not advisable to increase excise duty on iron and steel products from the present rate of 8%.
Indian Steel Industry is facing many challenges. In order to meet the growing demand for steel, the companies are expanding their existing capacities, which require huge investments.
Domestic steel industry is facing stiff competition from imports. Due to lower International Prices of iron and steel products, imports are growing and exports are decreasing. During Apr’09-Jan.’10, imports of finished steel stood at 5.9 million tonnes against 5.0 million tonnes in the corresponding period of last year, representing a growth of 18%. As far as country-wise imports are concerned, imports from Russia, Ukraine, Korea and France during Apr’09-Jan’10 have registered growth of 87%, 120%, 8% and 148% respectively.
On the contrary, the exports of finished steel during Apr.’09 to Jan.’10 stood at 2.4 million tonnes against 3.6 million tonnes in the corresponding period of last year, representing a decline of 34%.
The growth in domestic steel production has been lower compared to the apparent steel consumption till Dec.’09 during 2009-10, resulting in shortage of supply. While the apparent steel consumption registered a growth of 7.8%, the crude steel production registered a growth of only 4.0% during Apr.’09-Dec.’10.
Under the existing fluctuating pricing conditions, increasing excise duty adversely affects the sales and the profitability of steel companies.

M Venkata Chary, Deputy General Manager,
Visakhapatnam Steel Plant,
Rashtriya Ispat Nigam Limited, Visakhapatnam
mvchary@vizagsteel.com

(Note : The opinion expressed is personal and does not reflect that of the Company)