The government announces the reduction of customs duties on iron and steel inputs
Finance Minister Nirmala Sitharaman said on Saturday the government would rework tariffs on iron and steel and their raw materials to bring prices under control.
“We are calibrating tariffs on raw materials and iron and steel intermediaries to reduce their prices. Import duties on certain steel raw materials will be reduced. Export duties on certain steel products will be levied,” the minister said in a series of tweets.
The minister also said that the government has decided to reduce tariffs on raw materials and intermediaries for plastic products where India’s reliance on imports is high. This will result in a reduction in the cost of end products, the minister said.
Earlier this month, India announced a wheat export ban as grain prices rose amid a heatwave in northern India.
In addition, the government is also taking steps to improve the availability of cement. This is being done through better logistics to reduce the cost of cement, the minister said, adding that orders will be issued on Saturday.
On Friday, Sitharaman had expressed concern over the possible impact that the rising cost of construction inputs may have on infrastructure creation at a time when the government is pursuing an economic recovery focused on infrastructure investment.
“Today the world is going through difficult times. Even as the world recovers from the Covid-19 pandemic, the conflict in Ukraine has led to supply chain issues and shortages of various products. This leads to inflation and economic hardship in many countries,” the minister said.
Retail price inflation measured by the consumer price index (CPI) and inflation measured by the wholesale price index (WPI) have increased in recent months, mainly due to a surge in world commodity prices.
According to data released earlier this month, retail inflation accelerated to its highest level in nearly eight years in April, led by a stronger-than-expected spike in food prices and manufactured products.
Experts said the reduction in excise duties on petrol and diesel and the benchmarking of tariffs on iron and steel announced on Saturday will complement the RBI’s monetary policy tightening to rein in the ‘inflation. CPI-based inflation rose to 7.79% in April from 6.95% the previous month. According to Aditi Nayar, chief economist at ICRA Ltd. CPI-based inflation in May is expected to be between 6.5 and 7.0%.