India’s steel exports grow 25% in FY22
The export of Indian finished steel products e.g. Hot Rolled Products and Bright Bars has leapt over 25% this year. The Indian government has taken several measures to increase the availability of iron ore. By initiating reform in the Mining and Mineral Policy, the government has increased the availability of iron at reasonable prices. This is good news for Indian suppliers, as the market could expect a good bounce when it comes to exports.
BCD is exempted up to March 31, 2023
For the year 2022-23, BCD or basic customs duty has been exempted from the union budget. Additional steps taken to improve steel exports include reducing the import duty to zero. This means manufacturers and exporters of steel bright bars and hot rolled bars will have to pay no import duty. Thus, raw materials like coke & semicoke, ferronickel, and anthracite/pulverised coal injection (PCI) coal will be cost-effective.
Is manufacturing the next big thing in India?
Since June 2021, global alloy exports from China have seen a sharp decline. Many developed nations such as the United Kingdom and the United States of America have been finding an alternative to China. This gives India an edge, as low-cost labour, combined with currency conversion and reduced export duty gives them the added benefit. Alloy suppliers can take advantage of these facts to offer developed countries bright bars at a reasonable price.
Another advantage India has in terms of its manufacturing is that more capital may be siphoned into this sector. Quite recently, India’s industrial index has delivered an exceptional performance as compared to Sensex. Mutual fund managers may choose this opportunity to invest in the manufacturing sector. Despite high inflation reports, many metal stocks have outperformed indices.
INR to fall to ₹82 in the third quarter of FY22
The Indian Rupee has fallen almost 9% against the US dollar since January this year. Nomura further predicts INR depreciation in the third quarter to ₹82 this year. While this scenario is grim for Indian importers, exporters can enjoy the benefits of currency depreciation. Typically, exporters may see a net gain because the dollar has become strong. This means they will receive a higher amount for their dollars. One of the main sectors to benefit from the INR depreciation is the steel industry. India exported 12 million tons of steel alone last year. Considering the increase in the export duty imposed by the government, a depreciation in the Indian currency is good news for exporters.