Metals industry welcomes import duty cut

NEW DELHI: The Indian govermnent abolished import duties on scrap metal and increased an export duty on chrome ore in its budget on Friday, moves which local industry said would provide some relief from soaring raw material prices.

A 5 percent duty on iron, steel melting scrap and aluminium scrap was removed in the government's budget for 2008/09, and the general rate of excise duty was cut to 14 percent from 16 percent.

"The cost of non-ferrous metals costs has gone up, and these moves will also give some relief to the working capital," said Surendra Mardia, president of the Bombay Metal Exchange, whose members include metal dealers, processors and fabricators.

The international prices of copper has more than doubled over the past one year, and aluminium has gone up by about one-third. "It will definitely help as we have no choice but to import melting scrap for stainless steel production," said N C Mathur, a director of Jindal Stainless.

The cost of steel scrap, which is a key raw material for special steels, alloys and stainless steel, has nearly doubled over the last one year to $500 per tonne, Mathur said. Pawan Burde, metals and mining analyst, Angel Broking, said the removal of the duty would benefit small firms, as they could cut their dependence on iron ore.

Further helping domestic-focused firms, the export duty on chromium ores was raised to to 3,000 rupees ($75) per tonne from 2,000 rupees. India exported around 1.3 million tonnes of chrome ore a year, Mathur said. Chrome ore is used in making ferrochrome, which in turn is used to make stainless steel.

India's metal manufacturing industry have been lobbying for a halt to exports of raw materials such as iron ore and chrome, arguing they threatened future supplies for local firms. There was no change to export duties of 300 rupees per tonne on high grade iron ore and 50 rupees per tonne on low grade ore, which were introduced in last year's budget.

Steel makers have been lobbying for raising the export duty on iron ore. "That hasn't happened and it's not good for the industry," said Nitin Johari, chief financial officer of Bhushan Steel and Strips Ltd. For exporters, it was small comfort.

"The finance minister hasn't spoken about iron ore at all. So, I presume the current duty continues, though we had requested the government to withdraw it as there's no case for a duty," said Rahul Baldota, president of the Federation of Indian Mineral Industries.