In an attempt to safeguard the domestic steel industry, the proposal of Border Adjustment Tax (BAT) is back on the discussion table. CNBC-TV18 has learnt that the steel ministry has proposed BAT to the commerce ministry and has also held several rounds of discussion with the stakeholders.

Share Market Live

NSE

“As part of Aatmanirbhar Bharat, India is looking at ways to make steelmaking cost-competitive; many countries exporting to India have the advantage of various subsidies given to steel manufacturers from their respective governments,” an official from the Ministry of Steel told CNBC-TV18.

“Border Adjustment Tax will be a fast-paced measure to plug cheap imports. BAT will also ensure balance on import surge from countries where India has free trade agreements. The commerce ministry at a recent stakeholders meeting has assured to push for BAT,” the official added.

The idea behind the proposal for BAT is to reduce import dependence especially from countries where India has a free trade agreement. Sources indicate that the commerce ministry is in favour of bringing BAT but it will be subject to the finance ministry's approval. BAT was first proposed in late 2019 by the commerce ministry to safeguard the steel industry, but it was not announced in the budget.

On the issue of the proposed tax, Dr. Bhaskar Chatterjee, secretary-general, Indian Steel Association, said: "Indian Steel Association has been raising the issue of expeditious implementation of Border Adjustment Tax with the Ministry of Finance, Ministry of Steel, and the Prime Minister's Office.

"The imposition of Border Adjustment Tax on imports will go a long way in bringing tax parity and eliminating a fundamental disadvantage for the domestic industry including steel."

The steel ministry believes that the implementation of BAT will ensure a level playing field for the domestic steel manufacturers as input tax credit benefit is not passed on to them currently. It also believes that the BAT proposal is World Trade Organisation (WTO)-compliant as many countries are using the mechanism to safeguard their local industries.

BAT is proposed to be imposed on imported steel goods in addition to customs levy.

South Korea, China, Japan, Indonesia, and Taiwan are top exporter of steel products to India. Trade deficit remains a concern for India as it imported steel worth about Rs 44,500 crore against an export value of Rs 36,500 crore.

First Published:Jul 9, 2020 3:12 PM IST