- 15% duty to be levied on stainless steel flat and long product exports
- Existing 2.5% import duty on ferro nickel waived off
In a very significant development late on 21 May 2022, Indian government has imposed hefty export duties on stainless steel in a bid to preserve higher domestic supplies and control rising prices.
The government has also waived off existing import duty on ferro nickel which is major source of nickel for the making of 300 series stainless steel.
Govt’s new duty structure
Clearly, the government wants to control prices of stainless steel to ensure higher supplies for the domestic industry.
- 15% duty will be levied on flat-rolled products of stainless steel of width >=600mm
- 15% duty will be levied on bars and rods, as well as angles, shapes and sections of stainless-steel.
Indian stainless steel exports surged 42% y-o-y in FY22 although it has long struggle to sustain its exports amid cheap stainless steel inflow from China and Indonesia.
However, offering some relief to stainless steel producers, the government has removed the 2.5% import duty on ferro nickel.
The stainless steel industry meets the bulk of its nickel requirements through ferro-nickel and stainless steel scrap. The duty removal on ferro-nickel is a long-standing demand of the industry.
Rationale and impact
The announcement of substantial export duty on key raw materials and steel points to the government’s intent to control inflation and prices. Export duty on stainless steel is likely to result in higher domestic supplies, thereby, exerting downward pressure on prices.
In line with its earlier move of lifting the import duty on ferrous scrap announced in the budget, the government is seeking to ease the pressure on domestic producers by removing import duties on other raw materials.
The ongoing tariff may have impact of average INR 5,000-6,000 per tonne of stainless steel exports which indicates that exports will still continue with supporting factors of depreciating currency, lower domestic demand and current exports surplus though companies may review its ongoing expansion plans for now.
“In effect of new tariffs, stainless steel exports to East Asian countries will not be possible right now, although doors are still open for Europe with lesser margins,” a trader said while talking to SteelMint.
Overall, the government’s move is more focused to rein in surging domestic stainless steel prices to boost infrastructural development.
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