Budget 2022: GOI cuts steel custom duty structure to boost manufacturing

The reduced customs duty on steel will help in stabilising domestic steel prices

In the year 2021, the steel sector witnessed a strong momentum and continued its upward pace, aided by a recovery in consumption and a sharp uptick in prices. However, in recent times, the sector faced moderation in prices, largely attributable to a slowdown in Chinese steel production and resultantly, a sharp correction in the global iron ore prices.   

In the Union Budget, expectations for the steel sector were mainly centered around import duties cuts on certain steel products, which are detrimental to providing some respite to the infrastructure and the MSME sectors. The announcements made were largely on similar lines.   

While announcing the Union Budget, Finance Minister Nirmala Sitharaman announced a reduction on custom duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy, alloy & stainless steel. In addition to this, in a move to provide relief to MSME metal recyclers, who were severely hit by a recent sharp rise in iron & steel prices, there was also an exemption duty on steel scrap for a period up to March 31, 2022. The reduced customs duty on steel will help in stabilising domestic steel prices. Although the landed price of imported steel will come down, this would put some pressure on the Indian steel companies.  

In addition to this, the government announced 400 new-gen Vande Bharat trains that will be developed and manufactured over the next three years. This step is positive for the players, supplying steel and stainless steel for the coach body.  

Nifty Metal index climbed 4.41 per cent on Tuesday as the investors cheered the Union Budget before trimming gains. Tata Steel, Vedanta, Jindal Steel, and SAIL were among some of the top gainers.