Budget 2013: Increase customs duty on sponge iron to 10 percent, asks SIMA

 NEW DELHI: Union Budget 2013 should increase customs duty on sponge iron from current level of 5 percent to 10 percent, Sponge Iron Manufacturers Association (SIMA) said in its pre-Budget memorandum. 

According to the industry body, import of sponge iron is also increasing at an alarming rate which can be noticed from the following table where 3 years HBI/DRI imports are as under:
2010 - 11: NIL
2011 - 12: 48000 MT
2012 - 13 (upto Jan'13): 6.11 lakh MT 

SIMA also asked for an increase of basic customs duty on steel melting scrap from 0 percent to 10 percent. 

In its pre-Budget memorandum, SIMA said import of steel melting scrap in current financial year from April 2012 to January 2013 has broken all the records. 

"India's import of scrap may touch around 8 million tonnes in the current financial year leading to valuable foreign exchange outgo of the order of about $3.5 - 4 billion and will therefore contribute significantly in the much talked current account deficit (CAD)," it said. 

The reasons for this substantial increase in the import of steel melting scrap may be attributed to steel production is not matching to demand, no green field steel plants coming up in the country and zero customs duty on steel melting scrap. 

"Such huge import of scrap is killing Indian sponge iron industry which is already burdened with the rising cost and restricted availability of inputs like iron ore, non coking coal and natural gas," SIMA said. 

In the light of the above, there are enough justifications for the GOI to increase basic customs duty on steel melting scrap from 0% to 10%, it added.