8INDIAREVIEWJULY- AUGUST - 2024STEEL INDUSTRY TO FACE ADDITION COSTS WITH IMPLEMENTATION OF MINING CESSThe recent enforcement of a new mining cess by various states, following a Supreme Court ruling, may present challenges for the domestic steel industry by increasing cost pressures, according to rating agency Icra. On August 14, the Supreme Court confirmed that states have the authority to levy taxes on mineral rights and mineral-bearing land, and they can seek refunds of royalties dating back to April 1, 2005.This development is expected to compress operating margins within the sector, affecting both primary and secondary steel producers. Icra's analysis suggests that primary steel producers could see a margin reduction of 60-180 basis points, while secondary producers might experience a more significant impact, with margins potentially declining by 80-250 basis points, depending on cess rates which could range from 5-15 percent.The power sector, heavily reliant on coal, could face a rise in supply costs by 0.6-1.5 percent, which may lead to increased retail tariffs. Additionally, primary aluminum producers, who have high power consumption, will also be affected.Girishkumar Kadam, Senior Vice-President and Group Head of Corporate Sector Ratings at Icra highlighted that the imposition of a new mining cess by mineral-rich states could intensify cost pressures for the steel industry. Although most states have yet to set specific rates, any significant cess could adversely impact margins, particularly for secondary steel producers, as increased costs from merchant miners are expected to be passed on.Icra also noted that the Supreme Court ruling brings renewed attention to the Orissa Rural Infrastructure and Socio-Economic Development Act, 2004 (ORISED), which allows for a 15 percent cess on iron ore and coal. Full enforcement of this provision could increase the landed costs of iron ore by 11 percent, thereby affecting the cost competitiveness of domestic steel producers.In a related development, the Jharkhand government has recently imposed an additional Rs 100 per tonne on iron ore and coal. While this increase is expected to have only a minimal impact on operating margins, reducing them by 30-40 basis points, it sets a precedent that other states may follow. IMRCABINET CLEARS BIOTECHNOLOGY POLICY TO BOOST BIOMANUFACTURINGThe Biotechnology for Economy, Environment and Employment policy is approved by the Union Cabinet with the goal of promoting high-performance biomanufacturing within the Department of Biotechnology. Ashwini Vaishnaw, the Minister of Information and Broadcasting, stated that the 'BioE3' policy aims to provide innovation-focused assistance for research and development, as well as entrepreneurship in various sectors."One of the biggest decisions (taken in today's Union Cabinet meet) is about BioE3. Like there was industrial revolution and IT revolution, a bio revolution will soon take place. Fields related to bio-technology and bio-science will help in generating a lot of job opportunities. For this, we needed a good policy framework - Biotechnology for Economy, Environment and Employment - which has been approved by the Cabinet. This policy has six pillars," said the union minister.He stated that the plan is anticipated to speed up technology advancement and commercialization through the creation of biomanufacturing and bio-AI centers and a biofoundry. In addition to giving importance to regenerative bioeconomy models for sustainable growth, this policy will also support the growth of India's skilled labor force and boost job opportunities."The BioE3 Policy will foster and advance a future that is more sustainable, innovative, and responsive to global challenges and lays down the Bio-vision for Viksit Bharat," said an official statement.Advanced biotechnological processes can enable the production of a wide range of products such as medicine, materials, and bio-based products, while also tackling agricultural and food-related issues. IMR TOP STORIES
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