Impacts & Opinions

Impact of GST on Steel Sector

  • Steel industries contribute nearly two per cent of the country’s Gross Domestic Product (GDP) and Employs over 600,000 people in India.
  • Steel industries of India were third largest producer of crude steel and are expected to become the second-largest producer in near future.
  • The steel industry is the highest leveraged sector in India.

Benefit of Steel Industries after GST:

Reduction of logistics cost and time:

Presently if a truck passes throw different states there are number of indirect cost attributed to the product and this increase the price of the product. Each time it crosses a state there are number of check post which delay the supply of goods to the customer. In the post GST regime there will 40 to 45 % saving in time.

Generation of employment in un developed states:

Implementation of GST will reduce corruption in highly corrupt states of Orissa, Jharkhand, Karnataka and Chhattisgarh, because of transparency in the post GST regime. Middleman will be eliminated from the system. In the post GST regime more and more person will have to follow the line of business and that will generate the employment and in turn will improve the GDP.

Utilization of natural resources:

GST will give more money to Under-developed states for their resources. By proper auctions and elimination of the middleman the state govt will be able to fetch the proper value and price of their resources.

Protection to domestic industry:

Steel industry plaguing with a rising threat of imports, GST rates on imports should be at the same level as for domestic supply.

Reduction in production cost:

GST rate is 18 % against the current average rate of indirect tax at 20%. It would, therefore, reduce production cost.

Current tax laws on iron and steel

There are three different kinds of taxes that are currently levied on the manufacture of steel(in any form) and reaching the end-consumer.

Excise Duty at the rate of 12.5%

Average VAT at the rate of 5%

Central sales tax(CST) at the rate of 2%.

A net tax of 19.5%(12.5+5+2) is charged on steel under the current laws. Articles made of steel are also charged at the same rate except for Punjab where the VAT rate for articles of iron and steel is 2.5% currently.


  • Generation new employments.
  • No cascading effect.
  • Utilization of natural resources
  • Logistic cost reduces