Pre-budget 2025

Sustainability and Growth: Stainless Steel Industry’s Pre-Budget Wishlist

The stainless steel industry has outlined its pre-budget recommendations, emphasising long-term zero-duty imports for critical raw materials and higher customs duties on flat products to curb imports. These measures are essential to enhancing sustainability, ensuring supply chain resilience, and boosting domestic manufacturing competitiveness.

 

As the government prepares the Budget for 2025-26, the stainless steel industry is calling for key reforms to bolster its global competitiveness and sustainability. With over 70 per cent of its raw material requirements imported, the industry emphasizes the need for long-term zero-duty imports on essential raw materials such as ferro nickel, molybdenum and stainless steel scrap. These measures aim to address the supply chain challenges posed by India’s limited natural resources, particularly for nickel and molybdenum.

Furthermore, the sector urges increased customs duties on stainless steel flat products to mitigate the impact of surging imports, primarily from China, which grew by 123 per cent from FY21 to FY24. Promoting a level playing field through these adjustments will help domestic manufacturers fully utilise their production capacity, reducing dependency on imports.

A balancing act

Aruna Sharma, Practitioner Development Economist and Secretary (retd), Government of India, spoke about her pre-budget expectations with us.

She shared, “The concessions and consistency for the long-term require keeping the custom duties as zero and reduced in terms of high carbon silicon alloys, which will enable to reduce the input cost and resultant cost of stainless steel and will compete with dumping resorted by China. The imposition of custom and import duty should be on basis of essential inputs at zero so that cost of production becomes competitive.

  • Basic customs duty on ferro nickel and pure nickel should be kept at zero on a long-term basis.
  • Basic customs duty on roasted molybdenum concentrate (26131000) and ferro molybdenum (72027000) and basic customs duty on ferro nickel molybdenum (72029990) to be kept at zero basic customs duty on shelmo scrap (72044900) and continue for stainless steel scrap to be kept at zero on a long-term basis to provide this key raw material to the industry at competitive rates.
  • Custom duty on high carbon silicon alloys to be reduced from 7.5/5 per cent to nil as this material is exclusively imported.
  • Reduction in import duties of Ti and FeNb is also required.”

To further improve its competitiveness, the industry highlights the necessity of rationalising duty structures on critical raw materials like graphite electrodes and titanium alloys. The current duties increase production costs, making domestic stainless steel products less competitive in global markets. Reducing these duties would alleviate financial burdens on small and medium enterprises and encourage investments in the environmentally friendly Electric Arc Furnace (EAF) technology, which relies heavily on recycled scrap and aligns with global sustainability goals.

Another pressing issue is the misuse of Free Trade Agreements (FTAs) by certain ASEAN nations. The industry has flagged instances where raw materials from non-compliant regions like China are processed and exported to India at preferential duty rates, circumventing tariff barriers. Addressing these loopholes by enforcing stricter compliance checks and introducing digital verification of origin certificates will prevent unfair competition and protect the domestic industry from further harm.

Sustainability is also at the forefront of the industry’s recommendations. The continued use of recycled materials, like stainless steel scrap, aligns with global environmental goals by reducing greenhouse gas emissions and conserving natural resources. With a projected surge in demand for stainless steel, these initiatives are critical for fostering sustainable growth while ensuring India remains a competitive player in the global market.

By addressing these concerns, the Budget 2025-26 can play a pivotal role in advancing the stainless steel sector, a cornerstone of India’s infrastructure and manufacturing ambitions.

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