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Ambarish Mukherjee

New Delhi , Nov. 15

PRIMARY steel producers in the Indian market are engaged in a fire fighting exercise. Faced with the possibility of a reduction in the import duty on steel, the primary steel producers are planning a sort of dual pricing policy for domestic buyers.

The primary producers are planning to come up with an offer to sell hot rolled steel to secondary steel product exporters on `free on board' (f.o.b) basis, which means the same price at which the primary producers are selling in the international market. This, however, is provided it is treated as deemed exports and qualifies for export incentives.

According to sources in the primary steel producing companies, international prices are always lower than the domestic price and this difference is more or less equivalent to the transport cost involved in landing imported steel in Indian ports.

As per the provisions in the existing advance licence scheme for secondary steel product exporters, a company can import steel duty free if it is re-exported with value addition. Apart from this, these companies are also encouraged to export by way of incentives offered through the Duty Exemption Pass Book scheme (DEPB) of the Commerce Ministry.

Primary producersare likely to suggest that they are prepared to stand by the secondary steel industry and there is no need for the Government to cut import duty on steel. Instead, these producers will offer international rates to the secondary steel exporters provided the Government treats it as deemed exports for the primary producers and gives them the benefits of export.

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