GST to be a game changer for Steel industry: ISSDA

ISSDA Stresses The Need For Stainless Steel Railway Coaches

NEW DELHI: The GST regime will be a game changer for stainless steel industry, as it is expected to simplify compliance mechanisms and curb parallel economy, industry body ISSDA has said.

The apex stainless steel industry body has also urged the government to include electricity, furnace oil and natural gas, which are key inputs for production of stainless steel into the scope of Goods and Services Tax (GST), scheduled to be rolled out from July 1.

“The GST regime will be a game changer for the stainless steel industry. The new tax structure 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,” Indian Stainless Steel Development Association President K K Pahuja told PTI.

Primary stainless steel products will attract 18 per cent GST which will help the industry to grow and avoid the hassles of multiple duty structures. At present, primary steel products have 12.5 per cent excise duty, 5 per cent of VAT and 2 per cent CST, he said.

“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 per cent. Logistics, which forms a crucial part of the cost structure for any product, is also expected to reduce significantly with the seamless movement of goods across the states,” Pahuja said.

However, the industry would stand to gain more if electricity, furnace oil and natural gas could also be considered under the ambit of GST, the industry body said.

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,” 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,” Pahuja said while commenting on the new indirect tax regime.

“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,” he said.

Post GST rollout, 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, Pahuja added.

The country’s stainless steel output rose to 3.32 million tonnes during 2015-2016 over 2014-15 showing an impressive growth of more than 9 percent, he said.

In 2016, India piped Japan to become the second-largest stainless steel producer in the world after China.

Indian Stainless Steel Development Association (ISSDA), the apex body representing the stainless steel industry, also stressed the need for designing and building safer stainless steel coaches for passenger safety. The Indian Railways has already announced the replacement of all old steel coaches by stainless steel in a phased manner. In the light of the accident of Indore Patna Express, the conversion of coaches needs to be fast tracked by the railways before any more many innocents lose their lives. Developed countries like USA, Canada, Brazil, Japan, Korea & Australia and many East Asian countries use stainless steel for passenger coaches.

Stainless Steel coaches are stronger and absorb more energy during collision as compared to carbon steel. They also have the ability to withstand considerable impact without fracturing. Since it progressively crumples from the point of impact, risk of injury and fatalities are drastically reduced. The lesser deformation of damaged coaches further helps in rescue operations. If one were to look at the current accident, the old design coaches were so badly mangled and deformed that precious time was lost in trying to reach to the passengers trapped inside. As a result, the number of casualties was far higher than it should have been.

Stressing on the need for stainless steel coaches, the Anil Kakodkar High-Level Safety Review Committee mandated a complete switch over to LHB production within five years“We expect railways to act now on immediate basis and switch to stainless steel coaches for making rail journey safer and prevent any further loss of lives due to accidents”, said K.K Pahuja, President ISSDA.

Indian Railways use stainless steel coaches in LHB designs for Rajdhani, Shatabdi and other premium trains. These LHB coaches are designed to be anti-telescopic, which means they do not pile up over each other in the event of derailment thereby reducing casualties. Approximately 22 million people, every day commute through trains in India. Hence, there is an urgent need to replace existing coaches with stainless steel coaches to ensure better safety for the passengers. LHB coaches made of stainless steel are designed to be lighter but stronger than normal steel coacher. Further, these coaches have a competitive longer life cycle, better life cycle cost & good corrosion resistance.

Facebooktwittergoogle_plusredditpinterestlinkedinmail