Sitharaman says Centre to bear Rs.220,000cr a year revenue implication from duty cuts
The Government has made big changes on duties for export and import of raw materials to reduce costs and boost domestic production of essential products and materials for development across the country.
The Government has raised export duty on iron ore fines to 50% effective 22 May 2022 from 30%, putting a virtual stop to the mineral supplies to China and a strategic move to ensure that all of the estimated 200 million tonnes mined ore is taken by local mills.
Iron ore traders were just about commencing talks on shipping grade below 57% Fe to the Chinese market and generate some revenue for mines in Karnataka and Goa though the China’s giant cash-rich mills would have bargained hard to take on offers to blend the ore, according to mineral traders.
The Government has also imposed 45% export duty on iron ore pellets and 15% on pig iron, HR, CR, coated steel, bars and rods (HR), bars and rods (others) and coils as well as stainless steel.
India exported 15.28 million tonnes of iron ore, 11 million tonnes of pellets and 20 million tonnes of steel products in 2022.
On 20 May 2022, the Supreme Court lifted the curbs on sale and export of iron ore from Karnataka while Goa has been working around to get clearance to export iron ore since October 2021 and had hoped for deals with the Chinese mills, which traders believe could have been at “throwaway” prices.
The Government has taken measures to provide relief from prevailing high prices of crucial raw materials and intermediates such as petrol, diesel, coal, iron, steel and plastics on 21 May 2022.
Central excise duty has been reduced by Rs.8 per litre for Petrol and by Rs.6 per litre for Diesel (by reducing Road & Infrastructure Cess).
In order to reduce the cost of domestic production of steel products, import duty on following raw materials of steel has been reduced.
Import duty has been removed on Anthracite/pulverized injection (PCI) coal and coking coal from 2.5% as well as coke, semi-coke (from 5%) and ferronickel (2.5%).
Import duty has also been reduced on Naphtha to 1% from 2.5%, Propylene Oxide to 2.5% from 5% and Polymers of Vinyl Chloride (PVC) to 7.5% from 10%.
This was to reduce the cost of domestic production of plastic products.
Finance Minister Nirmala Sitharaman has clarified that the entire cost of the reduction in excise duty on petrol and diesel is borne by the Central Government and the state’s revenue would not be impacted by the move.
The Minister explained, “Basic Excise Duty (BED), Special Additional Excise duty (SAED), Road & Infrastructure Cess (RIC) and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on petrol and diesel.”
The Basic Excise Duty is sharable with states. Special Additional Excise Duty, Road & Infrastructure Cess, and Agriculture & Infrastructure Development Cess are non-sharable.
Sitharaman said the duty reduction made on 21 May 2022 has an implication of Rs 100,000 crore a year for Central Government while the duty reduction made in November 2021 has an implication of Rs 120,000 crore a year.
Total revenue implication to Centre, from these two duty cuts, is thus Rs 220,000 crore a year, the finance minister said.
In November 2021, the Government had cut excise duty on petrol by Rs.5 per litre and diesel by Rs.10 per litre.
The duty cut in November 2021 was from the Road & Infrastructure Cess (RIC) category. fiinews.com
