Finance minister Nirmala Sitharaman said on Saturday that the government will rework customs duty on iron and steel and their raw materials to tame prices.
“We are calibrating customs duty on raw materials and intermediaries for iron and steel to reduce their prices. Import duty on some raw materials of steel will be reduced. Export duty on some steel products will be levied,” the minister said in a series of tweets.
The minister also said the government has decided to reduce customs duty on raw materials and intermediaries for plastic products where India’s import dependence is high. This will result in reduction of cost of final products, the minister said.
Earlier this month, India had announced a ban on export of wheat as the grain’s price surged amid a heat wave in Northern India.
Separately, the government is also taking steps to improve the availability of cement. This is being done through better logistics to reduce the cost of cement, the minister said, adding that orders will be issued on Saturday itself.
On Friday, Sitharaman had expressed concern at the possible impact the rising cost of construction inputs can have on infrastructure creation at a time the government is pursuing an infrastructure-investment led economic recovery.
“Today, the world is passing through difficult times. Even as the world is recovering from Covid-19 pandemic, the Ukraine conflict has brought in supply chain problems and shortages of various goods. This is resulting in inflation and economic distress in a lot of countries,” the minister said.
Retail price inflation measured by Consumer Price Index (CPI) and inflation measured by the wholesale price index (WPI) have been surging in recent months mainly driven by a surge in global commodity prices.
As per data released earlier this month, retail inflation accelerated to its highest in nearly eight years in April led by a sharper than expected spike in the price of food and manufactured goods.
Experts said the cut in excise duty on petrol and diesel and customs duty calibration on iron and steel announced on Saturday will complement the RBI’s monetary policy tightening in taming inflation. Inflation based on CPI had scaled 7.79% in April from 6.95% in the previous month. According to Aditi Nayar, Chief Economist at ICRA Ltd. CPI based inflation in May is expected to be between 6.5-7.0%.