Skip to main content

20 per import duty recommended on steel products for 200 days

Temporary step, which is WTO-compatible, a bid to protect domestic industry from the sudden rise in imports
The Directorate General of Safeguards (DGS) under the finance ministry has suggested imposing a 20% safeguard duty on select steel products for a period of 200 days to curb cheap imports.
Such a duty is a temporary step and is imposed for a timeframe to protect the domestic industry from the sudden rise in imports. The duty is WTO-compatible, too.
“There exist critical circumstances, where any delay in application for provisional safeguard measures would cause damage which it would be difficult to repair, necessitating immediate application of provisional safeguard duty,” the directorate said in a notification on Wednesday.
The duty has been recommended for hot-rolled flat products which has seen a significant rise in imports from countries like China, Korea and Japan. Domestic steel companies have been struggling to stay profitable due to a pricing pressure from the cheap imports.
“Market share of imports has increased from 6% to 12% and, consequently, market share of the domestic industry has declined from 45% to 37%,” the notification said.
The DGS recommendation is pending a final determination by the directorate general.
It is an outcome of an investigation which DGS carried out based on a plea by Steel Authority of India Ltd, Essar Steel India Ltd and JSW Steel Ltd on 27 July.
The three firms together represent 50% of the domestic steel production and have been facing margin pressure due to weak demand and heavy imports.
The overall steel demand has been soft and grew at a meagre 4.6% in the April-August period, according to data from the joint plant committee (JPC) of the steel ministry.
Steel imports, however, have been rising at a faster pace. Total finished steel imports to India rose 50.8% over the same period on a year-on-year basis, shows the JPC data.
“The safeguard duty will help arrest a further fall in domestic steel prices but I do not expect steel companies to be able to hike prices as there is no demand. In case the duty is applicable to FTA (free trade agreement countries), imports from countries like Japan and Korea could decline,” said Goutam Chakraborty, research analyst at Emkay Global Financial Services Ltd. He, however, added that Chinese steel may still remain competitive in the domestic market.
The increase in cheaper imports have forced domestic steel firms to cut prices and avert a loss in market share. Hot-rolled steel prices dropped by Rs.3,000-4,000 a tonne in the April-June quarter, which brought down the cost difference between imported and domestic steel, Mint reported on 27 July.
Weak demand over the last couple of years have affected the steel sector’s financials, too. Only one in three steel firms listed on BSE Ltd is able to generate sufficient cash flow to pay interest on loans on time, Mint reported on 4 August.
According to Capitaline data, just 41 out of these 129 companies, which have collectively borrowed Rs.2.63 trillion, have an interest coverage ratio (ICR) above 1.5 times, considered a safe level while measuring a company’s ability to pay interest. The ratio is calculated by dividing a company’s earnings before interest and tax by its interest expenses.
HT Mint, New Delhi, 10th Sept. 2015

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s