Financial Daily from THE HINDU group of publications
Saturday, Feb 28, 2004
Government - Policy
Industry & Economy - Exports & Imports
Govt cuts steel duties, freezes export benefits
New Delhi , Feb. 27
THE Government today decided to freeze all export incentives to steel manufacturers to facilitate increased availability in the domestic market. In a bid to clamp down on rising steel prices it has also been decided to drastically reduce customs and excise duties.
Simultaneously, the secondary steel sector and small-scale user industries would be provided with an annual subsidy of around Rs 70 crore to enable them to manufacture their products at competitive rates.
These decisions were taken at a high-level meeting chaired by the Prime Minister, Mr A.B. Vajpayee. Those who attended the meeting include the Union Minister of Steel, Mr Braja Kishore Tripathy, and the Commerce and the Industries Minister, Mr Arun Jaitley.
The meeting decided that the Duty Entitlement Pass Book scheme and the duty drawback schemes will be suspended for the time being for all categories of carbon steel which include hot-rolled and cold-rolled steel as well as pig iron. The import duty on coking coal will be brought down to zero from the present five per cent level.
The high-level meeting was preceded by a meeting with representatives of the major steel producers' representative body, the Indian Steel Alliance (ISA).
The ISA has given a written undertaking to the Government that its members would supply steel at Rs 1,500 to Rs 2,000 less than the market price to the small-scale sector.
To provide further relief to the SSI sector, it has been decided that the Joint Plant Committee will provide a subsidy of Rs 500 per tonne to the small units. This would amount to a total subsidy bill of around Rs 70 crore - Rs 85 crore annually.
The subsidy would be routed through the State small-scale industries corporations of the respective States. These corporations have been asked to submit the annual projected demands of the units located in their States on an urgent basis.
As regards customs duty on pig iron and other grades of carbon steel, sources said that the existing duty of 10 per cent would be brought down to five per cent and that for coking coal from 15 per cent to five per cent.
On excise duty, it has been decided that the existing duty of 16 per cent is likely to be halved to eight per cent but this will be on a "refundable basis". This means that companies will still have to pay the duty which the Government will refund them latter.
Briefing reporters after the meeting, the Commerce Minister and the Steel Minister said that the entire exercise is unlikely to have any impact on the net revenue collection because "the prices have increased the lower tax rate will still generate the same amount of tax as it was estimated when the prices were low."
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