The Union Budget 2016-17 presented by the Honorable Finance Minister, Mr Arun Jaitley, focuses on policy and taxation reforms needed to provide impetus to the economy and reflects the government’s commitment to improve the Ease of Doing Business. Through the Union Budget, the government has taken steps to boost the agricultural and social sector for an inclusive growth. The Budget has taken a special emphasis on Tax Reforms and Dispute Resolution which should go a long way in creating a facilitating environment for conducting business in India. The FM has tried to do a balancing act between fiscal consolidation and growth in the midst of global headwinds.
India is the world’s third-largest producer of crude steel (up from eighth in 2003) and the world’s 3rd largest consumer of finished steel. Steel sector should get the much needed demand boost through the government spending in infrastructure. The budgetary proposals announced by the Finance Minister will help the industry meet its growth target and reach its full potential. However, the doubling of Clean Energy Cess from Rs 200 to 400 per ton would further increase the input cost for domestic producers.
In the coming days we are hopeful that the Government will take steps to progress the GST Bill including the suggestions given under CEA panel. Steel Industry is a significant contributor to India’s GDP and is also pivotal to a number of allied industries and sectors such as- Infrastructure, Automobile, Construction . Therefore it is important that the steel be brought within the ambit of the GST.
The domestic steel industry will continue to play an important role to the Government of India’s schemes of ‘Make in India’ and ‘Smart cities’ as it is a key material supplier to the allied industries. However, the industry has been bogged down by a deluge of imports and predatory pricing over the last 18 months. And the absence of a level-playing field with countries would impact the domestic producers. While recent interventions by Government of India has given some breather, long term measures to create a level playing field are required to firewall the domestic steel industry from Global overcapacity and dumping .
(This article is authored by TV Narendran, MD of Tata Steel India)
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