Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Siri Bulusu
Indian manufacturers are asking the Finance Ministry to introduce tax policy measures in the upcoming budget to protect domestic steel and solar panel manufacturers.
If industry requests to the government are taken up, the 2018 Budget, set for Feb. 1, may include an import tax exemption on raw materials used in steel production to promote local steel manufacturing, practitioners say. And introduction of a 70 percent tariff on imported solar panels would boost domestic producers, they added.
Most indirect taxes fall under the purview of the Goods and Services Tax Council, a government body charged with administering the new indirect tax system, but the Finance Ministry can amend import and customs duties.
In its pre-budget submission, India’s Ministry of Steel asked for a reduction on all import duties on metallurgical coal (met coal) and other raw materials used in steel production because prices on raw materials have been increasing over the past year, a steel ministry official told Bloomberg Tax Jan. 31.
Current taxes payable on met coal are a 2.5 percent basic customs duty and an integrated goods and services tax of 5 percent.
The GST rate applicable to raw materials can only be changed by the Goods and Services Council, but the 2.5 percent basic customs duty could be removed in the upcoming budget proposal.
Prices need to improve or input costs should improve, the official told Bloomberg Tax, adding that “every drop counts” when balancing the market conditions for the domestic steel industry.
India’s steel demand is expected to grow by 7.1 percent in 2018, according to a 2017 World Steel Association report, and practitioners say the health of the sector is crucial for the government to make a push for improved infrastructure.
“Over the past few years, Chinese steel has been very competitive and eating away at the Indian market, so the industry could be protected by reducing input costs for domestic producers,” Pallav Narang, a partner at the chartered accounting firm Arkay & Arkay, told Bloomberg Tax Jan. 31.
Domestic manufacturers could so another tax policy change in the 2018 budget aimed at protecting India’s solar panel manufacturers from Chinese competition: a 70 percent tariff on imported solar panels.
The proposed tariff hasn’t yet been imposed, but practitioners say it could be a highlight in the budget proposal and an indication that the Indian government is serious about promoting its domestic solar energy market.
In November 2017, the Indian Solar Manufacturers Association submitted an application to the Directorate General of Safeguards, Customs and Central Excise, asking the body to investigate the impact of solar panel imports on India’s domestic manufacturers.
The investigation projected that the growth rate of imports of solar cells from China, Malaysia, Singapore and Taiwan would increase to 643 percent in 2017-2018, with the “major quantity” of imports coming from China, according to the report released on January 5, 2018.
The increase in imports of solar cells will cause “serious injury to the domestic industry,” according to the Directorate General of Safeguards, which proposed a provisional safeguard duty of 70 percent be imposed.
“Basically, the objective of the Directorate General of Safeguards is to evaluate what the price is in the local market, the manufacturing costs and at what price those products are being imported into india and sold to ultimately determine what injury is being done to the domestic market,” Suresh Nandlal Rohira, a partner at Grant Thornton India LLP, told Bloomberg Tax on Jan. 31.
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)