JSW Steel has offered to supply steel to export-oriented engineering companies at the landed cost of imports without adding customs duty under the advance licence mechanism.

In a bid to incentivise export, the government allows exporting units to import raw material duty-free under the advance licence.

While steel companies have been demanding the government to increase duty to prevent cheap imports, the Engineering Export Promotion Council recently voiced concern against the protectionist measure.

In a presentation made to the Commerce Ministry opposing any hike in steel import duty, EEPC highlighted how steel prices have shot up in the past two years. This apart, it said the delivery period has increased to 4-6 months from just a few weeks ago, it claimed.

Domestic steel prices are pegged to the landed cost of imports, including import duty.

Refuting the claim of EEPC, Seshagiri Rao, Joint Managing Director, JSW Steel, said there is enough schemes for exporting engineering companies to import steel without paying duty.

Assuming they are facing difficulty in importing, he said the industry is willing to supply steel at the landed cost under advance licence, he said.

Instead of allowing Indian engineering companies to import duty free and supporting global steel makers, the government under deemed export basis can reimburse part of the import duty to domestic steel companies for selling steel duty-free, said an analyst.

Read: India’s steel demand likely to grow above 7 per cent in 2019, 2020: World Steel Association

Sourcing steel domestically will not only bring down dollar-trade but also help government collect more tax from steel companies profit, he said.

In fact, he added engineering companies can source hot-rolled coil at a much cheaper price than importing, if the government reimburse import duty ranging ₹500-1,250 a tonne to steel companies.

Assuming HR coil price at $575 a tonne, it will cost engineering exporters ₹44,150 a tonne if they import duty-free while sourcing it under advance licence from Indian steel companies works out to ₹ 41,750-42,500 a tonne.

In talks with export body

The steel industry is in discussion with engineering export association to understand their issues, Rao said.

The industry has sought product-wise steel requirements of EEPC members with qualitative and quantitative details on an annual basis for next fiscal to ensure product-wise supply on monthly basis.

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