Industry steels against exports
Economic Times

After an intense battle with the government on rising prices, steel makers on Tuesday called truce by agreeing to stop exports, forego duty entitlement passbook (DEPB) benefits and supported reducing import duty on the alloy.

“Steel producers met the top brass of the steel ministry and conveyed that they shared the government’s concern on rising prices and its impact on the common man,” Indian Steel Alliance (ISA) president Moosa Raza said. “Accordingly, we have assured them we will exercise self-restraint on export of steel products with immediate effect to enhance domestic availability of steel,” Mr Raza added.

The ISA president pointed out that ISA has demanded bringing down the excise duty on steel to 8% besides seeking reduction in import duty on input materials such as met coke, refractories, ferro alloys, zinc etc.

“In order to increase supply in the domestic market and as a temporary measure to disincentivise exports, the industry extended support to the government in reducing import duties on steel along with abolition of DEPB benefits on exports,” he said.

The ISA also sought fiscal and physical measures to contain exports of iron ore and asked government to take necessary steps to facilitate the establishment of additional capacity and augment steel supplies in the market , he said. “Steel prices have been rising mainly due to unhindered rise in input costs. The input costs are expected to increase further from April 1,” he added, and asked the government to contain iron ore exports through fiscal and physical measures.

The steel producers and the government were at loggerheads on the issue of rising prices for the past month. Steel minister Ram Vilas Paswan had asked prime minister Manmohan Singh to consider setting up a regulator in the steel sector, impose 10% export duty on steel and abolish import duty on the alloy.
Besides, Mr Paswan had also suggested reclassification of steel as an essential commodity and withdrawal of DEPB benefits on steel exports to ensure its availability in the domestic market as the demand-supply mismatch was on the rise.

Mr Raza too shot off a letter to the prime minister saying that setting up a regulator would “be putting steel producers between the two prongs of a pincer” . It is understood steel makers were apprehensive that the government could initiate fiscal measures to contain rising prices if producers did not voluntarily roll back prices.

“The government should keep in mind that any proposal to appoint a regulator would open a Pandora’s box and there will be many demands to appoint a regulator for other commodities. We should place ourselves in a situation where we go back to a controlled regime,” the ISA president had said in his letter.