New Delhi: The Steel Ministry has asked the government to consider exemption of export duty on certain products, like cold rolled coils, for which raw materials have been imported under the Advance Licensing Scheme (ALS).
“Despite export duties announced on various steel products, it would be prudent for the government to consider allowing duty-free export of CR coils, galvanised steel, tubes and pipes for which HR coils have been imported under the ALS,” a senior Steel Ministry official said.
This was imperative to enable the producers achieve economies of scale especially those who manufacture high-end products, he argued.
“Therefore we have asked the government to take this matter into consideration and ask the Finance Ministry to notify the same while issuing notification on the export duties,” he said.
As part of its fiscal measures to contain soaring steel prices and enhance domestic availability of HR coils, the government had proposed to permit export of CR coils, galvanised products, coated steel, pipes and tubes only against import of HR coils under ALS.
“The import arrangements under the ALS was likely to be made effective from 1 July next,” the official said. He pointed out that with the Finance Ministry levying up to 15% export duty on various steel products this week, steel producers found it uneconomical to import HR coil under ALS, add value to it and export the value-added products after paying taxes.
The government had earlier intentions to crack the whip on steelmakers by abolishing export incentives offered to them in the form of Duty Entitlement Pass Book (DEPB) scheme, which is likely to deplete the coffers of steelmakers by about Rs600 crore.
Incensed at the spectre of a hit on their bottomline, the steel industry shot back, saying reduction of exports could adversely affect their competitiveness and lower the country’s reputation in the international market.
In the see-sawing battle on steel prices, Steel Minister Ram Vilas Paswan had asked Prime Minister Manmohan Singh to set up a regulator for the sector to monitor prices as well as impose measures to disincentives steel exports.
Steel prices have contributed 21.3% to the country’s inflation, hovering at 7.57% (for the week ended April 19), much beyond the RBI’s tolerance level of 5.5% for this fiscal.