New Delhi: Ahead of the budget, stainless steel firms have asked the Finance Ministry to increase customs duty to 25 percent from 10 percent at present to safeguard the interest of domestic firms in view of growing imports.
"There is an urgent need to control the growing imports and one way to achieve this is by increasing the customs duty rates. However, this is not possible with a small differential between MFN rate and peak rate of duty," Indian Stainless Steel Development Association (ISSDA) wrote in a letter to Finance Minister Arun Jaitley.
An MFN tariff is the lowest possible tariff a country can assess on another country.
"Therefore, it is suggested that the peak rate of duty for stainless steel products may be increased from 10 percent to 25 percent to enable any maneuverability in MFN rates as and when need arises," it added.
"It is, therefore, requested that in order to safeguard huge investment made towards development of Indian stainless steel industry, peak duty rates may be raised to 25 percent from the existing 10 percent," ISSDA said.
India is the third largest consumer of stainless steel in the world and has 2.68 million tonnes production capacity per annum. The domestic industry is reeling under a surge in imports primarily from China and other nations.
Overall, stainless steel imports have risen from 2.39 lakh tonnes (LT) in 2011-12 to 3.24 LT in 2013-14. Imports are expected to rise to 4.23 LT by the end of this fiscal.
India had pruned the peak customs duty from 12.5 percent to 10 percent for all goods other than agriculture products in the Union Budget of 2007-08.
"During this period, the import of stainless steel was a meager 1.44 LT against 3.24 LT in 2013-14. This surge of more than 80 percent in import volumes has been largely due to the low levels of import duties on stainless steel flat products," ISSDA said.
In the last Budget, the government had raised basic customs duty on stainless steel products from 5 percent to 7.5 percent.
