The Hindu Business Line : Import duty fails to prop up steel, edible oil co stocks

Mumbai, Nov. 19 The Government measures to protect the steel and edible oil companies from cheap imports seem inadequate, particularly when the commodity prices are testing new lows in the international markets. Stocks of both steel and edible oil companies in BSE were hammered on Wednesday.

Ruchi Soya Industries fell 12 per cent to Rs 22, Gokul Refoils 3.72 to Rs 190, Sanwaria Agro Oils 5.31 per cent to Rs 29 and Rasoya Proteins 1.26 per cent to Rs 27.

Among steel company stocks, Steel Authority of India was down 4 per cent to Rs 59, JSW Steel 1.51 per cent to Rs 238, Tata Steel 1.67 per cent to Rs 162, Bhushan Steel 2.38 per cent to Rs 605, Ispat Industries 2.17 per cent to Rs 10, Visa Steel 4 per cent to Rs 15 and Tata Metaliks 2 per cent to Rs 77.

“Though the shares of steel companies were up initially, it gave up the gains and ended in red as investors realised the Government measures were too little and too late,” said an analyst.

Metal prices in the international markets have plunged in the last few months on the back of sharp drop in demand. “Steel prices have crashed about 40 per cent in the recent past and further drop come in soon. We expected an import duty of 15 per cent,” said steel company official. The industry faces the threat of cheap imports from countries such as China and Ukraine.

The Government on Tuesday imposed a customs duty of five per cent on iron and steel products such as pig iron, semi- finished products, sheets and rods. Import duty on steel and crude soyabean oil was abolished seven months back to boost domestic supplies and cool down the rising prices.

The Industry was demanding to impose at least 30% duty on crude palm oil, 37.5% RBD olein and 20% crude soybean oil from the present level of ’Nil’ duty on crude oil and 7.5% on refined oils.

Mr Ashok Sethia, President, Solvent Extractors’ Association, said the Government should have fixed duty on crude palm oil at 30 per cent, RBD olein at 37.5 per cent and also raise the duty on refined soybean oil at 27.5 per cent to save the farmers and the domestic crushing industry.

India is importing about 85 per cent palm oil and 15 per cent soybean oil.

The import of soybean oil during November to February would have been very minimal at landed cost difference of over $350 tonne and now with 20 per cent duty the difference will be over $500 a tonne. “The Government has maintained refined soybean oil duty unchanged at 7.5 per cent. This is an anomaly. The Government has always kept lower duty on crude oil compared to refined oil so as the local refinery can utilize their capacity, make value addition and provide employment within the country. This decision will hit the domestic refining industry processing crude soybean oil also,” he said.

More Stories on : Stocks | Excise and Customs | Exports & Imports | Oilseeds & Edible Oil | Steel

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