Makers of alloy steel have reached out to the Steel Ministry seeking an import duty waiver on direct reduced iron pellets that are made through the gas-based or hydrogen-based route. The waiver is sought as a part of Ministry’s push toward green-steel-making.
Currently, the import of direct reduced iron pellets or hot briquette iron — both used towards steel making and emitting lower carbon compared to traditional steel-making raw materials — attract a 5 per cent duty.
In most cases, Indian long steel producers and stainless-steel makers either use scrap or DRI pellets sourced using coal-based technologies. Gas-based ones are generally imported for non-availability of merchant-based DRI gas plants.
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The Alloy Steel Producers Association of India (ASPAI), in a letter to the ministry, has called for the waiver of import duty be considered in the Budget and be looked at as efforts towards decarbonisation.
“It is apparent that though Scrappage Policy has been introduced, a recent Ministry study on scrap has revealed substantial shortage likely both in the short-term and long-term....... (The) GoI may consider Nil (zero) import duty on import of DRI/HBI (gas-based)... This is in line with the Nil duty on steel scrap,” the letter to the Ministry, reviewed by businessline, mentioned.
Use of scrap in steel-making is seen as a low-carbon emitting option. Scrap import here does not attract any import duty.
Alternative to scrap imports
Moreover, steel-makers in India also foresee a shortage of steel scrap in the coming days. India at present uses 25 million tonnes of scrap; majority of which is imported from UAE, the EU, the UK and the USA.
At least 60 countries including the European Union (which accounts for 5 million tonne of imports), are bringing in policies and taxes thereby making exports costlier or stop exports altogether.
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Countries that applied scrap export barriers or are going to bring in such barriers will provide 77 per cent of the global crude steel output.
In this backdrop, the Indian industry body points out that making the imports free for DRI or HBI pellets made from gas-based or hydrogen-based tech would support the “clean metallic requirement” and enable creation of low carbon di-oxide embedded raw material which in turn will help reduce carbon footprints.