GST Gives Relief to TATA Steel Under Odisha Agreement

As per the recent findings, Tata Steel is now capable of selling Kalinganagar products across India under GST Regime. GST is going to roll out from 1st July 2017, and the year is good for Tata Steel also as it will bring more liberal operations in its company. Along with the introduction of new indirect taxation structure, TATA steel can now sell their finished products from its Kalinganagar steel plant in Odisha outside the state across the nation.

Tata Steel signed the Memorandum of Understanding (MoU) agreement with the Odisha Government in November 2004 and was bound to sell products only in Odisha. Due to this restrictive agreement, TATA Steel was not allowed to export finished products to the country (outside Odisha).

The Kalinganagar steel plant of Tata commenced its operation in May 2016. Products such as Tata Ferroshots and HR (hot rolled) coils are brought forth under the Kalinganagar unit and exported primarily to South East Asian countries.

Though Odisha has a nameplate capacity of 21 million ton (mt) annually in steel making in which hardly 2.6 mt is consumed within the state. The consumption of finished steel points to the lack of downstream industries despite the presence of steel majors like Tata Steel, Jindal Steel & Power Ltd (JSPL), Jindal Stainless Ltd (JSL) and Bhushan Steel.

A Tata Steel source said, “Now, we see no hurdle to selling products from out Kalinganagar facility with the announcement of the introduction of GST from July 1. The GST rollout will ensure us a seamless transportation of our products. Though we were shipping the products overseas, we preferred to sell more in the domestic market to ensure better margins.”

According to Senior Official of Odisha Government said, “After GST, Tata Steel to sell its products within the state. We would not oppose their sales.” Since from the commencement date, Kalinganagar unit of Tata Steel has approximately crossed 2.23 ton and 1.61 million ton of hot metal production and HR coils respectively.

Apart from Hot Rolled coils, Kalinganagar unit of Tata Steel has also manufactured Tata Ferro-shots. It is granulated with pig iron and solidified by cooling in water. TATA steel products are made with the induction furnaces, cupolas, basic oxygen furnaces, electric arc furnaces, cupolas and foundries as a replacement of pig iron, scrap or DRI. Tata Ferro-shot product has been recognized or accepted in both markets international as well as domestic. The product has demanded in South East and Middle- East Asia, Far- East, Europe, and the US.