New Delhi: In an effort to encourage steel exports, the government may soon restore the duty entitlement passbook (DEPB) scheme for the industry, according to people familiar with the matter.
Responding to the sector’s demand, the ministry of commerce and industry is understood to have forwarded the proposal for DEPB restoration to the committee of secretaries (CoS), they said.
“It is now up to the CoS to take a final call,” a senior official in the steel ministry said on condition of anonymity.
Under the DEPB scheme, companies can avail of refund of customs duty paid on imported raw material for manufacturing products meant to be exported under the norms of the directorate general of foreign trade.
The government had in mid-June withdrawn DEPB benefits for the steel sector as part of measures to control inflation and to augment the domestic supply of the commodity.
Now that there is a slump in demand for steel and prices have fallen steeply due to the global economic recession, the industry wants the scheme reintroduced and also the 15% import duty on steel reimposed to ward off cheaper shipments from China and Ukraine.
“Even if there isn’t much scope for steel producers to export now because demand has fallen, providing DEPB benefits will surely help the industry when the international market improves,” said a senior official of a steel firm requesting anonymity.
The restoration of the scheme will come as a respite for steel companies that have long-term export commitments, he added.
In India, almost all steel producers used to avail the DEPB scheme until it was withdrawn. The DEPB rate normally varies between 2% and 8% on iron and steel items.