PTI reported that steel products in India will cost less by with the government on Sunday announcing a 4% cut in CENVAT rate to boost demand of the commodity in the domestic market.
As a part of the stimulus package, the government today announced an across the board cut of 4% in the advalorem CENVAT rate with immediate effect, for the remaining four months of the current fiscal. Steel products are priced between INR 25000 per tonne to INR 40,000 per tonne in the domestic market and the lowering of duty by 4% would mean the product would get cheaper at least by INR 1,000.
Steel products currently attract an excise duty of 14%, which would now go down to 10%. Since most products are modvatable, where excise refund is given to manufacturers for value addition, the benefit would be restricted to long products like TMT and structural steel, which are used in the construction sector and are currently not modvatable.
Mr SK Roongta chairman of Steel Authority of India Limited said that "It is a welcome move. With the lowering of the excise duty steel prices will automatically get lower stimulating more demand for the commodity."
Mr Vinod Mittal vice CMD of Ispat Industries Limited said that "It is a positive step. End consumer will be benefited. Steel prices will come down by INR 1,600 a tonne. The move, which will stimulate demand for the commodity in the market, will help in construction of low cost housing projects."
Mr Seshagiri Rao CFO of JSW Steel said "Due to the cut, prices of our products will immediately get cheaper by up to INR 1,500 a tonne. It is an across-the-board cut, auto industry and infrastructure will get the much needed stimulus."
However, with the cut, government is slated to lose about INR 8,700 crore in revenue in the remaining part of the fiscal.