New Delhi, Sep 5 (PTI) Commerce and Industry Minister Piyush Goyal on Thursday mooted the idea of introduction of border adjustment tax and suggested discussions on this with the steel industry with a view to protect the domestic players by providing a level-playing field against increasing imports.
He said that this tax is in compliance with the World Trade Organisation (WTO).
The idea assumes significance as the industry is seeking protection from imports at predatory prices.
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 on lowering carbon emissions and promoting 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 circle economy in a bigger way,” he said, while addressing a steel conclave virtually.
He suggested that 4-5 top leaders of the steel industry can sit with him on this important subject for deliberations.
The minister added that the government was not able to extend the benefits of the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme to the sector due to a shortage of funds.
“I think there’s another very important subject that I have made a lot of effort on in the past but sadly could not succeed. Let’s make one more effort. On the Border Adjustment Tax, electricity duty, iron ore duties, when you are exporting steel, we are loaded with these taxes,” he said.
Goyal said that imported steel which comes into India doesn’t have to pay all these taxes.
“Border Adjustment Tax is a WTO-compliant mechanism, which if all the industries — CII, FICCI, Assocham — everyone take out, we may be in a position to get traction and get it also into the country,” he said.
“Imports, even from FTA (free trade agreement) countries at least, will be alluded with the similar electricity duty, coal cess, any additional state levies or taxes that you’re not getting remitted, which are not being charged in other countries, can be adjusted through a border adjustment tax. So let 4-5 of us sit down…and take this dialogue forward,” Goyal added.
His statement was in response to ISA president Navin Jindal’s concerns on the steel industry needing support and protection from imports happening into India at predatory prices from FTA countries.
“China has set up capacities in those countries meant to export to India and export into India at huge losses and that is damaging the Indian steel industry,” Jindal said.
Commenting on the idea of this tax, think tank GTRI said that the Indian steel industry is looking for protection from cheap imports, with one option being discussed is imposition of a Border Adjustment Tax (BAT) on imported steel.
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.
“However, BAT 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,” GTRI Founder Ajay Srivastava said.
But the option of raising basic customs duties is however not available on imports from FTA partner countries, Srivastava said, adding any such step will lead to increase in price of imported steel, which will lead to general price rise as steel is a critical building block of the economy.
Also, with higher protection, local steel firms may increase prices. It’s also important to analyze steel firms’ balance sheets and understand whether some of the steel industry’s problems are internal, rather than just import-related, he said.
“To help Indian steel exports, the government should consider extending the RODTEP scheme to the steel sector. It is their right and permitted by the WTO,” Srivastava said.
Goyal also said that Korea and Japan consume steel made by their own steel plants, and give them preference even at times, at a higher cost “whereas sadly many friends in our industry don’t have a similar approach”.
He asked the industry to inform the government of any unfair trade practices in other countries so that India can take steps to deal with those barriers.
“I’m keen to know more from you what we can do…we may retaliate, may even take some action in such instances, to curb any irrational imports,” Goyal said.
In July, the European Union (EU) suggested that India can devise its own mechanism instead of paying the carbon tax to the EU.
Goyal had said that the ministry would consider the EU’s suggestion and come up with whatever is good for the Indian industry and for the people.
He added India is in dialogue with the EU on the tax or Carbon Border Adjustment Mechanism (CBAM).
As per reports, an EU delegation has suggested to New Delhi that India could implement its own carbon tax and reduce carbon emissions.
The EU has decided to impose CBAM, or carbon tax, which will come into effect from January 1, 2026, but from October this year, domestic companies from seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products, would have to share data with regard to carbon emissions with the EU.
India has strongly criticised the move and is in dialogue with the EU on the issue. PTI RR CS HVA
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