To encourage small businesses and the secondary steel sector, the government has exempted duty on steel scrap till March 31, 2022. This was announced in the country’s union budget on Monday. The one-year waiver on import duty applicable on the ferrous scrap has lifted buyer sentiments, said traders. Duty on copper scrap imports has been reduced to 2.5pc from 5pc.
The Indian government has also reduced customs duty on import of semi-finished steel, flat and long products of non-alloy, alloy and stainless steel from 10pc to 7.5pc. Market participants believe the duty cut will impact flat products more than long and specifically, impact imports from non-FTA countries.
Tweaks in the duties will help reduce input costs of domestic manufacturers including the ones catering to the auto sector, said industrialists. The recent hike in iron and steel prices, driven by the shortage of raw material, impacted many MSMEs and other small-scale industries. This impact will be balanced with the removal of ADD and CVD on certain steel products.
Despite demand from many small steel producers, the budget refrained from imposing duty on export of iron ore, which is seen as positive move by some market participants.
Beside a $1.5 trillion budgetary allocation for infrastructure in core sectors like railways, roadways, and petroleum and natural gas, the introduction of vehicle scrappage policy will generate more domestic scrap, and reform and strengthen the recycling sector in India.