Steel & Metallurgy
Magazine
Current Issues Corporate Film Upcoming Conferences

June, 2017 Issue

We firmly believe that over the next few years more focus will be placed on technological packages and revamping projects with much more proximity to customers.. ... ..

May, 2017 Issue

Certain cold reduction operations involve the rolling of narrow, thin gauge strip having an asymmetric (wedged) transverse thickness profile, formed from wider, symmetric.. .. ..

April, 2017 Issue

Bamerol OMNICOM 3M grease was developed keeping the stringent challenges of uneven load and adverse environment issues in consideration for heavy duty.. .. ..

March, 2017 Issue

Wire- the international fair for wire and cable industries and Tube- the international fair for tube and pipe industry, will simultaneously present their technology highlights.. .. ..

February, 2017 Issue

LanzaTech and Primetals Technologies are enabling a resource revolution in the steel industry that supports a circular economy, by decoupling the use of natural resources and.. .. ..

January, 2017 Issue

LanzaTech and Primetals Technologies are enabling a resource revolution in the steel industry that supports a circular economy, by decoupling the use of natural resources and.. .. ..

December, 2016 Issue

Reduction of width deviations and avoiding of overwidth and below-minimum widths after the finishing mill (FM) are challenges for today’s basic and process automation systems for . .. ..

 



From the Desk
GST Impact on Domestic Steel Industry
The wait is over. Finally the much awaited Goods and Service Tax (GST) is here. Let us have a look on how GST will make impact on the domestic steel industry.

Indian steel sector is one of the most leveraged sectors hitherto, as being drowning heavily under high debts and reluctance of the banks further provide it with loans.

Price reductions at global level in 2015 led to a severe impact on the operating margins of the domestic steel plants and in turn became major contributor to the nonperforming assets (NPAs) of the public sector banks. Post GST implementation, the situation may ease as the credit cycle will become smooth, thereby improving the visibility of revenues and increasing liquidity and availability of working capital.

GST will reduce logistics cost and time substantially. While transporting from one state to another, a cargo has to pass through from levies of various taxes like VAT, excise duties, custom, etc. At every point, corruption emerges and in turn leads to delay in delivering shipment. Because, it takes much time to reach its destination, previously paid taxes adds up indirectly in production cost leaving commodities expensive in the market for end consumers. GST being unified and standard rate of tax will diminish this cost and delay. In the post GST regime there will 40 to 45% saving in time.

Implementation of GST will reduce corruption in highly corrupt states because of transparency in the post GST regime. Middleman will be eliminated from the system of supply chain. In the post GST regime, as the transparent line of business will have to be followed, it will generate the employment and in turn will improve the GDP.

On the production front, 5% tax on coal will shrink the production cost for steel companies. This will also reduce the quantity of spot purchase from previous range of 40%- 50% at higher prices. Vigorous credit mechanism and anti-profiteering clause in the GST regime will facilitate to diminish procurement cost. So, marginal savings in cost of production are expected at 18% rate with a saving of 2%, as against the average of 20% from existing tax rate.

GST will also provide a level playing field to the domestic industry, as the similar GST rates would apply towards imports. Duty that will be levied under GST will be based on the reverse charge method. India is signatory to the agreement with international partners countries who are not liable to pay the import duty. But these countries will be subjected to GST at the national level post GST implementation.

However, if steel is used for non-creditable purpose, end user will have to bear this destination based tax. Also, classification of iron and steel under lower tax bracket would have helped Indian steel industry to compete with China better.

But overall, with a substantial slash in transport costs due to unified and standard tax rate under GST, this is likely to help steel companies reeling under large debt and also keep steel prices stable.

 
Major Events
Site Designed & Hosted by Amitech India® - http://www.amitechindia.com/