New Delhi : 3rd Feb, 2017 : Union Budget announced on Feb 1, 2017 left the India’s steel industry brimming with joy. Steel sector giants are anticipating a great bonus of demand given heavy-investment projects for infrastructure and housing, as introduced by the Finance Minister, Arun Jaitley.
In spurt to accelerate the economic growth for common masses and businesspersons, the programmes meant to fund and aid transportation, roadways, automotives, housing, agriculture etc will in turn derive advantages for industrial bodies, especially those dealing with steel components.
T.V. Narendran, the Managing Director of Tata Steel India and SEA reacted to the budget by agreeing that programmes for infrastructure will prove to be a key-driver of steel consumption.
He also felt that concentration on principal industries such as tractors and two-wheelers relied on Micro Small and Medium Enterprises along with rural economy, which were the leading agendas for progress in the budget 2017-18, could give a much-needed push to the steel industry.
Steel Industry Bigwigs Applaud the Union Budget 2017
Managing Director and Vice Chairman of Visa Steel, Vishal Agrawal was of the opinion that domestic steel demand will increase given the budget’s focus on rural economy, infrastructure, housing, defence, and railways.
Lalit Beriwala, the Director of Shyam Steel went on the describe the Union Budget 2017, as “good” with allocation of about Rs. 4 lakh crore towards infrastructure will definitely be a boon for the steel sector.
Deepak Parekh, the Chairman of HDFC Ltd said that housing will see a multiplier effect for a number of industries, including steel with cement. Infrastructure status grants housing companies an ability to borrow more for individual parties and group companies, beside an access to funds that EPFO and insurance companies invest in.
Adding on, Abhishek Goenka, the Partner-Real Estate Tax, PwC, said that the tag may cause an increased participation from private players in housing, thus showing a way of progress for steel sector.
Reduction of Basic Custom Duty on Nickel to Zero Enshrines Hope for Steel Sector
The budget did not consist of withdrawal of clean power cess and import duty on coking coal, which will indirectly impact the steel industry. The steel companies manufacture steel via sponge iron route, thus they are not impacted for coking coal import duty. The Government did waive the basic custom duty (BCD) on nickel, which is a key raw material in making steel.
The BCD came down to nil from the previous 2.5 percent, as per the Budget document. This move was applauded by many, and Ajani K Agarwal, the partner and national leader of Metal and Mining sector said that eliminating the basic custom duty is a great relief. It will help the domestic stainless steel industry (even though the share of stainless industry is small in India), as it was facing challenging times for imports earlier.
Agarwal further added that reduction of Basic custom duty on CRGO steel shall lend a hand in decreasing the cost of power transformers.
Nickel is majorly used in production of stainless steel, and Jindal Stainless Steel finds the budget 2017 a huge opportunity for steel industry. The Steel Ministry has taken efforts to earlier write to the Finance Ministry for seeking a reduction of import duty on nickel.
Things could not get better, as news also came for reduction of basics customs duty from 10 percent to 5 percent, on the MgO coated cold rolled steel coils that are used for manufacturing the CRGO steel. Also, the government reduced the basic custom duty (from 12.5 percent to 10 percent) on hot rolled coils, which would be imported for utilization in manufacturing of welded pipes and tubes.