India has shown impressive growth to become the second largest stainless steel producer in the world.
New Delhi: The GST regime will be a game changer for stainless steel industry, as it is expected to simplify compliance mechanisms and curb parallel economy, industry body ISSDA has said.
The apex stainless steel industry body has also urged the government to include electricity, furnace oil and natural gas, which are key inputs for production of stainless steel into the scope of Goods and Services Tax (GST), scheduled to be rolled out from July 1.
"The GST regime will be a game changer for stainless steel industry. The new tax structure will not only enhance the ease of doing business by simplifying compliance mechanisms but would also curb the parallel economy by bringing in more transparency," Indian Stainless Steel Development Association President K K Pahuja told PTI.
Primary stainless steel products will attract 18 per cent GST which will help the industry to grow and avoid the hassles of multiple duty structures. At present, primary steel products have 12.5 per cent excise duty, 5 per cent of VAT and 2 per cent CST, he said.
"Another positive side of GST on the stainless steel industry could be the inclusion of raw materials like coal and iron ore in tax slab of 5 per cent. Logistics, which forms crucial part of cost structure for any product, is also expected to reduce significantly with seamless movement of goods across the states," Pahuja said.
However, the industry would stand to gain more if electricity, furnace oil and natural gas could also be considered under the ambit of GST, the industry body said. 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.
"All these components are kept out of GST purview, which may affect the competitiveness of the industry in the long run," ISSDA said.
"GST is a good policy change for the Indian Stainless Steel industry. India has shown impressive growth to become the second largest stainless steel producer in the world," Pahuja said, while commenting on the new indirect tax regime.
"As 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 said.
Post GST rollout, stainless steel industry also expects reduced time for movement of goods. However, some concerns on the implementation of GST, additional compliance costs in IT network etc need to be addressed, Pahuja added.
The country's stainless steel output rose to 3.32 million tonnes during 2015-2016 over 2014-15 showing an impressive growth of more than 9 per cent, he said. In 2016, India pipped Japan to become the second largest stainless steel producer in the world after China.