| (in million tonnes) |
| Category |
2003-04 |
2004-05 |
2005-06 (Prov.) |
2006-07 (April-May 06)
(Prov. estimated) |
| Pig Iron |
3.764 |
3.228 |
3.856 |
7.096 |
| Finished Carbon Steel |
36.957 |
40.055 |
42.636 |
0.700 |
|
(Source: Joint Plant Committee)
|
Demand - Availability Projection
- Demand – Availability of iron and steel in the country is projected by Ministry of Steel annually.
- Gaps in Availability are met mostly through imports.
- Interface with consumers by way of a Steel Consumer Council exists, which is conducted on regular basis.
- Interface helps in redressing availability problems, complaints related to quality.
Pricing & Distribution
- Price regulation of iron & steel was abolished on 16.1.1992.
- Distribution controls on iron & steel removed except 5 priority sectors, viz. Defence, Railways, Small Scale Industries Corporations, Exporters of Engineering Goods and North Eastern Region.
- Allocation to priority sectors is made by Ministry of Steel.
- Government has no control over prices of iron & steel.
- Open market prices are generally on rise.
- Price increases of late have taken place mostly in long products than flat products.
Imports of Iron & Steel
-
Iron & Steel are freely importable as per the extant policy.
-
India has been importing around 1.5 Million Tonnes of steel annually.
-
Last three year’s import of Finished (Carbon) Steel is given below:-
|
Year
|
Qty. (In Million Tonnes)
|
|
2001-2002
|
1.271
|
|
2002-2003
|
1.510
|
|
2003-2004
|
1.540
|
|
2004-2005
|
2.109
|
|
2005-2006 (Prov.)
|
3.765
|
|
2006-07 (April-May, 2006) (Prov. estimated)
|
0.350
|
(Source: JPC)
Exports of Iron & Steel
-
Iron & Steel are freely exportable.
-
Advance Licensing Scheme allows duty free import of raw materials for exports.
- Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB scheme was temporarily suspended from 27th March 2004 to 12 July, 2004 for export of steel items. The Scheme has since been restarted. The DEPB rates have also been substantially reduced.
-
Exports of finished carbon steel and pig iron during the last three years is as :
(Qty. in Million Tonnes)
Finished (Carbon) Steel Pig Iron
2003-2004 4.835 0.518
2004-2005 4.381 0.393
2005-2006 (Prov) 4.000 0.224
2006-2007(April-May 06) (Prov.estimated) 0.650 0.048
(Source : Joint Plant Committee)
Duties & Levies on Iron & Steel
Customs Duty
- Peak rate for non-agricultural products reduced from 15 % to 12.5 %.
- Customs Duty on stainless steel and other alloy steel has been reduced from 10 % to 7.5 %. Duty on non- alloy steel remains unchanged at 5%.
- Duty for ferro alloys reduced from 10% to 7.5%.
- Customs Duty on primary and secondary forms of non-ferrous metals viz. Zinc has been reduced from 10% to 7.5%.
- Duty on steel melting scrap has been raised to 5%.
- Duty on refractories reduced to 7.5 %. Duty most of the raw material for manufacture of refractories has also been reduced to 7.5%.
- Duty on ores and concentrates reduced from 5 % to 2 %. In respect of Ministry of Steel this would mean a reduction in duty of 3% on iron ore, manganese ore and chrome ore.
- The Special Countervailing Duty (CVD) of 4 % to be imposed on all imports with a few exceptions viz. ships for breaking, coal and coke etc. Full credit to be allowed to manufacturers of excisable goods.
Service tax:
Service tax rate increased from 10% to 12%.
Direct Taxes:
No change in rates of personal income tax or corporate income tax. No new taxes are also being imposed.
Levies on Iron & Steel
SDF LEVY- This was a levy started for funding modernisation, expansion and development of steel sector.
The Fund, inter-alia, supports :
1) Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants.
2) Research & Development
3) Rebates to SSI Corporations
4) Expenditure on ERU of JPC
- SDF levy was abolished on 21.4.94
- Cabinet decided that corpus could be recycled for loans to Main producers
- Interest on loans to Main Producers be set aside for promotion of R&D on steel etc.
- An Empowered Committee has been set up to guide the R&D effort in this sector.
- EGEAF – Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96.
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.
The Growth Profile
(i) Steel
The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies.
At present, total (crude) steel making capacity is over 34 million tonnes and India, the 8th largest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious " World Steel Dynamics", Indian HR Products are classified in the Tier II category quality products – a major reason behind their acceptance in the world market. EU, Japan have qualified for the top slot, while countries like South Korea, USA share the same class as India.
(ii) Pig Iron
In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs have sanctioned 21 new projects with a total capacity of approx 3.9 million tonnes. Of these, 16 units have already been commissioned. The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 5.28 million tonnes in 2002-03. During the year 2003-04, the production of Pig Iron was 5.221 million tonnes.