Posted on 24 May 2022
The unexpected arrival of duties on steel exports has wreaked havoc on the Indian steel industry and will see recently-established or signed export contracts badly impacted, Jindal Steel and Power (JSPL) managing director VR Sharma tells Kallanish. Around 2 million tonnes of export orders are in the pipeline, where either letter of credits are established or sales contracts are signed.
“All through the year, we were chasing the target given by the government to be a part of one trillion dollars of export revenue per year,” Sharma adds. “Now we are asked not to export steel because with a 15% duty the steel industry will not be competitive.”
“On one side, government is encouraging the steel industry to expand capacities and declared a PLI scheme; on the other hand, this move discourages exports. Most of the decisions are creating confusion,” the executive comments.
Removing import duties on coking coal will not benefit the industry much, as these accounted for only $10-12/tonne, depending on prices. Moreover, imposing export duties on low-grade iron ore and low-grade fines will not support the domestic industry, as there are no local beneficiation plants to process the low-grade ores. Banning iron ore and pellet exports simultaneously is therefore contradictory. Sharma opines.
The executive suggests authorities withdraw the duties or at least provide a three-month grace period to complete orders already taken. The government should encourage Coal India (CIL) to produce at least 1.5 billion tonnes/year of coal as against 800 million t/y now. This will immediately cool prices of all of commodities across the product list, Sharma adds.
The MD fears India will become a net steel importer by 2024 if duties continue to hamper exports.
Source:Kallanish
