A move by Finance Minister Janardan Sharma to increase local production in the name of decreasing the countryR17;s trade imbalance has put the country’s Rs 100 billion steel industry in jeopardy, according to reports.
In response to the governmentR17;s decision to increase excise duty and other taxes through the Replacement Bill of the budget legislation, industrialists predict that 24 steel mills in the country will go out of business as a result. According to businessmen, Finance Minister Sharma’s move to this effect will help only six of the thirty steel mills currently operating in Nepal, despite the fact that there are 30 total.
They claim that if the verdict is not changed, 24 industries will be forced to close their doors.
It has been included in the amended budget that no customs or excise duties will be paid on the import of sponge iron, which is the raw material necessary for the production of iron rods by melting the sheets, as a result of the provision being established. In contrast, the customs charge has been increased from Rs 4.75 per kilogramme and Rs 1,650 per kilogramme to Rs 2,500 per kilogramme.
The government has increased the excise duty on billet imports in exchange for a discount on the import of sponge oil, and the industry will be forced to close as a result of the rise in the price of steel, which has caused the industry to close.
In the steel industry, sponge iron and billet are both raw materials, and the steel industries have been importing sponge iron and billet in order to manufacture iron products such as bars. Only six industries in Nepal make use of sponge iron, with the rest relying on billet.
By granting tax and excise exemptions to only six sectors, according to Kiran Sakha, vice president of the Rolling Mills Association, the government is attempting to close the remaining 24 industries. Sheet metal is superior to sponge iron in terms of durability. However, by importing billet, the government has placed steel-producing industries in jeopardy, according to him.
Anjan Shrestha, director of Siddhi Laxmi Steel, stated that the government has implemented a policy that will have a negative influence on the private sector, despite the fact that the government is attempting to establish an investment-friendly climate. “It is not the appropriate moment to introduce different policies in the same fiscal year twice. “Before proposing any new policy, the government should consult with the private sector,” he stated.