Piyush Goyal for border adjustment tax to safeguard steel industry
New Delhi, Sep 5, 2024
Union Commerce and Industry Minister Piyush Goyal's statement comes at a time when the steel industry is seeking protection from imports at predatory prices
Union Commerce and Industry Minister Piyush Goyal on Thursday mooted the idea of introducing a border adjustment tax (BAT) and suggested discussions on this with the steel industry to safeguard the interests of domestic players.
The idea assumes significance as the industry is seeking protection from imports at predatory prices.
“Border adjustment tax is a World Trade Organization-compliant mechanism which, if all the industries— CII, FICCI, ASSOCHAM — everybody takes up, I think we may be in a position to get traction and get Border Adjustment Tax into the country,” he said, speaking at a steel conclave.
His statement was in response to Indian Steel Association President Navin Jindal’s concerns about the steel industry needing support and protection from imports coming into India at predatory prices from trade partner countries.
The idea behind BAT is that Indian steel producers pay taxes like electricity duty, iron ore duty, and coal cess, while imported steel is often cheaper because other countries may not have similar taxes, giving their steel a price advantage. BAT would level the playing field.
Ajay Srivastava, founder, Global Trade Research Initiative, said the BAT was not the best solution. “It may not provide enough relief, as it would only raise import prices by 2-3 per cent, which might not be sufficient. Raising basic customs duties (15 per cent on most steel products), which are still below the allowed bound duty limits (40 per cent), or imposing anti-dumping duties after proper investigations are other options. But the option of raising basic customs duties is, however, not available on imports from FTA partner countries,” he said.
However, Srivastava said it’s also important to analyse steel firms’ balance sheets and understand whether some of the industry’s problems are internal, rather than just import-related. “To help Indian steel exports, the government should consider extending the RODTEP (Remission of Duties and Taxes on Exported Products) scheme to the steel sector. It is their right and permitted by the WTO,” he added.
Goyal also asked the industry to target 500 million tonnes of steel production in the next 10 years. At present, the industry is eyeing 300 million tonnes of output by 2030.
The minister suggested the industry find newer and better ways to lower carbon emissions and promote high productivity and quality steel in the country.
"Let's try and utilise AI (artificial intelligence) to optimise our production, reduce waste, and improve efficiency across the value chain and work towards a circular economy in a bigger way," he said, while addressing a steel conclave virtually.
[The Business Standard]
