The Central government has removed export duties on steel and iron ore products imposed in late May with immediate effect. In a notification, the finance ministry said the changes have been made on being satisfied that it is necessary in the public interest to do so. With wholesale inflation in semi-finished steel moderating substantially, it was expected.
Some steel makers had expressed concern that while domestic demand has remained muted in recent months, companies are losing out on overseas customers due to the export taxes. Indian steel exports dropped a steep 53% in the first half of FY23 to 5 million tonne against almost 11 mnt seen in the same period in H1FY22.
Wholesale price inflation in semi-finished steel further eased to 4.3% in October from 8.39% in September 2022 compared with 19.03% in April. In the case of iron ore and concentrates, the 50% export duty has been removed on lumps below 58% iron content while the duty has been restored to 30% from 50% on lumps above 58% iron content. In the case of iron ore and concentrates, the 50% export duty has been removed on lumps below 58% iron content while the duty has been restored to 30% from 50% on lumps above 58% iron content.
With regard to iron ore pellets, on which a 45% duty was imposed, the tax has been withdrawn. Similarly, nine other classes of iron ore and steel intermediates which were subjected to a 15% export duty, have been exempted from the tax. The government has also restored the import duties which were removed in late May to reduce the cost of domestic production of steel products. Accordingly, it re-imposed 2.5% import duty on coking coal and anthracite (high energy coal) while a 5% duty on coke and semi-coke.
The government had imposed the export duties due to elevated prices of critical inputs such as steel and cement which had threatened to inflate the costs of the government’s projects in the housing, roads and railways sectors, apart from weighing on private investments in infrastructure.