FICCI seeks withdrawal of duty on steel

Wed 21 May 2008

Industry Chamber FICCI has sought withdrawal of export duty on steel and steel products, saying it would affect prospective investment projects worth a whopping Rs 1 lakh crore in the country.

In a representation to Finance Minister P Chidambaram, FICCI said the government's decision to impose 5-15 per cent export duty on steel and steel products would not only affect revenues of steel companies, but also their prospective investment plans.

"Export duty and voluntary price reduction by steel industry would significantly impact the margin of steel sector that could affect their future investment plans," FICCI said in a statement.

It noted that performance of the steel sector has shown signs of a slowdown with production of finished steel growing by a meagre 5.1 per cent in April-March 2007-08 as compared to an increase of 13.1 per cent in the corresponding period previous fiscal.

FICCI observed that Reserve Bank of India in its survey found that gross profit margin ratios of 105 iron and steel companies declined in the second quarter of the last fiscal vis-a-vis first quarter.

The ratio was 18.6 per cent in the first quarter, which declined to 17.9 per cent in the second quarter. The interest burden of steel companies also increased from 19.5 per cent in the first quarter of 2007-08 to 21.4 per cent in the second quarter, the Chamber pointed out.

Regarding imposition of export duty on value added steel products like pipe and tubes, FICCI said the "stringent move" would not be in the interest of Indian steel sector that has developed strength in the global market in the last few years, and for which exports have become an integral part of business strategy.

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