In one of their key Budget wish list demands, the Indian ferro alloys producers have asked for increasing import duty on all ferro alloys to 10%. This will allow the domestic makers a level playing field, they reasoned.
The ferro alloys industry is already battling factors like high power tariff, increase in raw material costs, poor demand by the domestic steel industry and cheap imports arising out of the devaluation of the currencies, lower power tariff and raw material costs in exporting countries like Ukraine, South Africa and Malaysia.
Electricity duty is acting as a major disincentive for power intensive industries like ferro alloys and steel. Even captive generation of power is not exempted from the duty. The industry has demanded that the electricity duty should be either abolished or kept at a minimal level of 1%. Moreover, cross-subsidy needs to be rationalised across all states.
Though India used to be one of the leading exporters of ferro alloys, over the past few years, the domestic makers have lost their export market share to Ukraine, South Africa, Malaysia and China, resulting in a major fall in exports. The Indian ferro alloys industry competes with South Africa, Kazakhstan and Malaysia, countries where power tariff is much lower compared to the average industrial tariff of India. Average industrial power tariff in India varies from Rs 5 to Rs six per unit of electricity. In comparison, South Africa’s power tariff stands at Rs 2.5 per unit and in Kazakhstan, its even lower at Rs 1.5-2 per unit.
Moreover, devaluation of currencies of South Africa and Kazakhstan and shrinking demand from the stainless steel industry has led to margin erosion for ferro chrome business. For gaining a level playing field with other major producing countries, the domestic ferro alloys industry desires that the export incentive under Merchandise Exports of India Scheme (MEIS) be restored to 4% from the present level of 2% and be extended to all countries.
Pointing out that India does not have sufficient reserves of coking coal for producing low ash metallurgical coal, the ferro alloys producers have called for withdrawal of anti-dumping duty on low ash metcoke imports from China and Australia. Anti-dumping duty (ADD) has been imposed on metcoke imports from China and Australi with effect from November 25, 2016. Imposition of ADD has denied the Indian ferro alloys industry a level playing field with other key producers. Moreover, coke prices have doubled in the last one year and ADD is further escalating the costs for the ferro alloys manufacturers.
Leave a Reply