The Hindu Business Line : Steel import duty may be cut to ensure supplies

IN order to increase the availability of steel in the domestic market and control prices, the Government may consider reduction of import duty on steel.

According to sources, the Government is contemplating a further reduction in the import duty on steel from the present 10 per cent to five per cent with the hope that lower landed cost of steel will prevent the Indian producers from hiking prices in the near future.

The Government is also likely to call a meeting with major steel producers early next week to discuss the modalities of stabilising steel prices and steady availability in the domestic market. The move follows a meeting between the Steel Minister, Mr Ram Vilas Paswan, and the Finance Minister, Mr P. Chidambaram, on Tuesday.

According to industry sources, the steel producers would be negotiating prices with original equipment manufacturers (OEMs) spread across various industrial sectors over the coming two to three months for finalising the long-term contracts, which are ending in the second quarter.

Anticipating the Government move, the Indian Steel Alliance (ISA), in a statement issued here on Wednesday said that any further reduction in import duties on steel will not benefit the customers but would send out a negative message to the stakeholders in the steel industry. Instead, the ISA feels that the excise duty should be reduced.

The ISA President, Mr Moosa Raza, said that the customs duty on steel has already reached rock bottom levels. Within a period of six months, the Government has reduced the import duty on steel from 25 per cent to 10 per cent.

Despite this reduction, domestic steel prices are very competitive as compared to the imports and lower than what the consumer pays in the US, Europe and China, he said and added that "what is required at the moment is to reduce the recent increase in excise duty back to 8 per cent, strengthen the distribution mechanism for the SSIs and help in maintaining supplies of inputs controlled by the public sector".

The ISA President also stated that the Government has to consider that the steel industry in India needs more that Rs 75,000 crore of investment over the next seven to eight years to increase capacity to 60 million tonnes. By making the domestic companies more vulnerable, the Government will only dampen the enthusiasm of entrepreneurs to invest in the industry in the long run.

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