The Hindu Business Line : Govt to cut DEPB rates for steel again

IN a move that will dampen steel exports, the Government has decided to further reduce the rates of Duty Entitlement Pass Book (DEPB) scheme applicable for steel. The DEPB scheme allows exporters to get benefit against the export value.

This will be the second reduction within one month, the earlier being in the first week of February.

The in-principle decision was taken at a high-level meeting here on Tuesday between the Union Minister for Steel, Mr Mr Braja Kishore Tripathy, and the Union Minister for Commerce and Industries, Mr Arun Jaitley.

In early February, DEPB rates for various iron and steel items were brought down from the 18-19 per cent range to a range of 9-12 per cent. The amount of duty cut this time will be finalised shortly, according to officials. Sources said the entire exercise might take "a maximum of one to two weeks."

The Steel Minister met the Commerce Minister after holding a meeting with the main steel producers where the steel-makers were asked not to go in for such frequent price hikes. "The producers have also been told exports should be undertaken only after meeting domestic requirements," the sources said.

It may be mentioned that the primary steel producers have increased the price of hot rolled steel four times within a span of two months from December 2003 to February 2004.

Official sources said the two Ministers have agreed to bring down the entitlement rate applicable for the steel sector and also put in place a linkage between iron ore exports and import of coking coal and coke.

"Commerce Ministry officials will now sit with the officials from the Steel Ministry over the next few days to work out the modalities of how this could be done and what sort of mechanism could be put in place to discourage exports of both finished steel as well as raw material," the sources said.

After the meeting, MMTC, which is the canalising agency for iron ore export, has been asked to work out a mechanism of linking export of iron ore with import of coking coal and coke, the sources said.

Import duty cut

In a bid to increase availability of steel and prevent further price escalation in the domestic market, the Government on Tuesday reduced the import duty on metcoke, pig iron and non-alloy steel for the second time within a span of less than two months.

In the beginning of January, import duty on steel was reduced from 25 per cent to 20 per cent, and the Special Additional Duty (SAD) of 4 per cent was abolished. Simultaneously, the duty on metcoke and pig iron too was cut in the mini-Budget announced by the Finance Minister, Mr Jaswant Singh, in early January.

In Tuesday's notification, the Government has brought down the import duty on metcoke from 10 per cent to 5 per cent, the duty on pig iron from 15 per cent to 10 per cent, and all other non-alloy steel items from 20 per cent to 15 per cent from immediate effect.