India: Steel industry requests duty exemption on pre-contracted export orders

The government of India has imposed hefty duties on various steel and steelmaking raw materials in late-May to preserve higher domestic supplies and control rising prices, SteelMint reported.

Thus, with regard to this, several recommendations from domestic steel industry such as ISA, JSL, ISSDA and MRAI have been made to the Ministry of Steel seeking exemption from export duty for existing orders and contracts. According to the letter, the Ministry of Steel too has approved this request made.

“It is true that the steel industry is seeking clearance of pre-contracted orders without being able to pay any export duty, however, these are only recommendations made by the industry to the Ministry of Steel, awaiting approval from concerned authority,” said a source.

“Largely it may be correct but there are few more orders with 20-30% advance which will also be counted and exempted because date of inward remittances can be easily verified from banks. So this figure may go up a little more,” a Mumbai-based exporter added.

About 2 million tonnes (mnt) of steel and iron ore pellet orders for exports are in the pipeline where either Letter of Credits were established or the sales contracts were executed prior to the date of notification, as per the request letter. Notably, only 541,940 tonnes of steel and iron ore pellet orders are backed by Letters of Credit.

The ministry is of the opinion that these concerns raised by industry participants are justified in such cases where the Irrevocable Commercial Letters of Credit have already been opened and may be considered favourably.

Steel exports hit all-time high in FY22

Indian steel exports hit an all-time high of more than 20.5 mnt in the financial year 2021-22 (FY22) compared to over 19 mnt seen in FY21, up 7% y-o-y.

Among this, the share of flats was the highest at 13 mnt, up 23% y-o-y. Overall, the volumes were mainly propped up by exports of downstream products like hot-rolled coils and plates, galvanised pipes and tubes and cold-rolled coils.

Finished longs’ overseas sales rose sharply by 86% to 2.43 mnt in the year under review. However, semi-finished steel (billets) exports dropped by 30% in this period to 5.05 mnt against 7.25 mnt in the previous fiscal.