Forthcoming GST regime will be a game changer for steel industry: ISSDA

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Source: The Economic Times
Tuesday, June 27, 2017

 KOLKATA: Indian Stainless Steel Development Association (ISSDA), the country’s apex stainless steel industry body, has said the forthcoming GST regime will be a game changer for the industry. While it is expected to simplify tax and logistics issues, the stainless steel industry urged the government to include key inputs like electricity, furnace oil and natural gas under ambit of GST to help retain its competitive edge. 

While GST rates for the primary stainless steel products have been set at 18%, the current rates on these products amount to 19.5% with 12.5% excise duty, 5% of VAT and 2% CST. This will help the industry in reducing tax compliances. However, the industry would stand to gain more if electricity, furnace oil and natural gas could also be considered under the ambit of GST, ISSDA said in a statement. 

“GST is a good policy change for the Indian stainless steel industry, K K Pahuja, President- ISSDA said while commenting on the GST implementation. ‘India has shown impressive growth to become the second largest stainless steel producer in the world. Per capita stainless steel consumption is expected to increase due to increased spend on infrastructure, construction, railways, food processing and many other end-use sectors where stainless steel scores better than other materials on account of life cycle cost,’ he added. 

The country’s stainless steel output rose to 3.32 million tonne for FY2016 over FY2015 showing an impressive growth of more than 9%. The industry will also benefit in GST regime with inclusion of raw materials like coal and iron ore in tax slab of 5%. Logistics is also expected to reduce significantly with seamless movement of goods across the states. 

However, concerns on the implementation of GST, additional compliance costs in IT network etc. need to be addressed, the statement added. In particular, the association has urged the government to include electricity, furnace oil and natural gas which are key inputs for production of Stainless Steel into the scope of GST. 
Stainless steel is majorly produced through Electric Arc Furnace Route or Induction Furnace, where electricity is a major cost of production. Similarly, furnace oil and natural gas are used for re-heating steel. Keeping these components out of GST purview, may affect competitiveness of the industry in the long run, ISSDA said. 


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