Steel Ministry has pitched for addressing the inverted duty structure in the upcoming Budget in a bid to protect the domestic industry, which is facing an onslaught of cheap imports and weak prices.
It has also asked the Finance Ministry to raise the peak duty rate from the present 15% to 25%, industry insiders said.
Budget for the 2016-17 fiscal will be presented by Finance Minister Arun Jaitley in Parliament next week.
Ministry has written to the Finance Ministry to re-look at the inverted duty structure, which is making import of raw materials such as coking coal, iron ore costly and is leading to an escalation in the operational costs of the steel firms.
The increase in input costs is adversely impacting the competitiveness of the domestic steel industry, which is already facing the issue of cheap imports.
Customs duties levied on key raw materials such as coking coal, iron ore and metal scrap are higher than those on the end product and that most steel exporting countries do not impose import duties on raw materials.
Another issue raised by the Steel Ministry is that of the peak customs duty.
If this is done, it will be the second consecutive increase in the peak rate. In the Budget for this fiscal, government had raised the peak customs duty from 10% to 15%.
Even by raising the peak duty rate to 25%, the country is well below the threshold of 40% allowed by the WTO.
Earlier this month, in a bid to to protect the domestic steel industry, the government had imposed a minimum import price (MIP) on 173 steel products ranging between $341 to $752 per ton. The minimum price will remain in place for six months only.