The metals and mining sector is eyeing a couple of sops in Budget 2020.
NEW DELHI: The metals and mining sector is eyeing a couple of sops from Finance Minister Nirmala Sitharaman in Budget 2020, including a reduction of import duty on coking coal and metallurgical (met) coke and an increase in import duty on aluminum scrap, in addition to a cut in dividend distribution tax (DDT).
Coking coal is one of the key raw materials used in steel production. It is predominantly used for making coke for use in steel making and, thus, forms a major part of the final price of steel.
Any move to cut import duty on coking coal to nil from 2.5 per cent (without any new technical definition of coking coal) will be positive for steel players.
The sector is also hoping for a cut in metallurgical coke’s import duty to nil from 5 per cent at present. “Currently, basic customs duty on met coke stands at 5 per cent. It is acting as a deterrent to India’s ‘Make in India’ initiative, as there is lesser incentive to import this raw material and boost indigenous production,” said ICICIdirect.
A reduction in import duty on coking coal and coke may lower input costs for Tata Steel, JSW Steel, JSPL and SAIL, says Antique Stock Broking.
Cess on coal is currently levied at Rs 400 per tonne. If it is removed, it would be positive for steel makers such as JSW Steel, said Sharekhan.
Among other key demands, the sector is seeking a hike in basic customs duty on aluminum scrap to 10 per cent from 2.5 per cent.
The government may increase aluminum scrap import duty to at least 5 per cent said Emkay Global. This, it said, should be positive for Hindalco, Vedanta and Nalco. It will be marginally negative for steel producers engaged in produced aluminum coated steel, it said.
There are also hopes that the government could increase pellet export duty. “The government might bring parity between export of high-grade ore and high grade pellets and levy a similar export duty on pellets as on ore. This will be positive for all steel companies that do not have captive iron ore mines and negative for pellet exporters like Godawari Power,” Emkay said.
Meanwhile, any move to cut dividend distribution tax rate will lower dividend distribution tax outgo for cash-rich companies such as Hindustan Zinc, Nalco, MOIL and NMDC.
