New Delhi: Indian Stainless Steel Development Association (ISSDA), India’s apex stainless steel industry body, has shown confidence in the forthcoming GST regime and claimed that it will be a game changer for stainless steel industry. GST rates for the Primary stainless steel products have been set at 18% while 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. GST 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.
Commenting on the GST implementation, Mr. K.K Pahuja, President- 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. 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.’’
Post GST regime, 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. 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.
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%. 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. However, industry would stand to gain more if electricity, furnace oil and natural gas could also be considered under the ambit 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. All these components are kept out of GST purview, which may affect the competitiveness of the industry in the long run.
The country’s stainless steel output rose to 3.32 million tons for FY 2016 over FY 2015 showing an impressive growth of more than 9%.