Export incentives for steel restored

Fortune seems to be finally smiling on the country8217;s beleaguered steel sector currently battling low prices and rising inventories...

Fortune seems to be finally smiling on the country8217;s beleaguered steel sector currently battling low prices and rising inventories, with the government tonight restoring the export incentives in the form of the Duty Entitlement Pass Book DEPB Scheme. What8217;s more, the government is also likely to notify re-imposition of 10 per cent import duty this week.

8220;We have already written twice to the Finance Ministry to re-impose 10 per cent import duty on steel products in view of the domestic prices going down. The move is aimed at boosting the local utilities. We expect the notification this week,8221; Steel Minister Ram Vilas Paswan said here. Steel Secretary Pramod Kumar Rastogi said earlier the Finance Ministry had sought certain clarifications on prices, which have already been furnished to it and hence the path has been cleared for the re-imposition of the said duty. With steel prices on a downward spiral, the producers had intensified their demand for re-imposition of the duty as well as imposition of 14 per cent Countervailing Excise Duty CVED.

Coincidentally, the Commerce Ministry today restored DEPB benefits for steel makers shipping their produce to certain countries. In a notification, the Directorate General of Foreign Trade DGFT said the export incentives have been re-allowed in almost all steel products. The move is bound to enthuse the utilities, which were hitherto clamouring for restoration of DEPB benefits as they were incurring financial loss worth Rs 500 crores ever since its withdrawal. 8220;The producers should be a happy lot,8221; Rastogi said. The government had withdrawn the incentives in June primarily with a view to disincentivise exports to contain spiraling domestic prices of the alloy and bridge the widening its demand-supply mismatch, which was triggering discontentment among different industries. The erstwhile Indian Steel Alliance, the dissolved umbrella organization of the leading steel producers had earlier petitioned the government highlighting the plight of the utilities following withdrawal of incentives. But restoration of DEPB is unlikely to accrue much benefit to the producers as global steel prices have declined and as such there is not much reason to export. However, when prices pick up and demand spirals, exporting steel to the overseas could benefit the producers duly.

Paswan said strong domestic demand and consumption and well-managed economic fundamentals will enable India to ride out the economic crisis. 8220;Well, there could be some problems with the Greenfield projects as they involve building projects from the scratch, but I do not see any reason on slowing of brownfield expansions, which are already on,8221; he said. The minister ruled out any possibility of an economic package to bail out the utilities, saying things have not yet come to such a pass. Companies like Ispat and JSW have announced production cuts to offset shooting input costs and rising inventories. Director Tata Sons and former MD Tata Steel J J Irani has said that steel companies are in troubled times and they will have to manage their inventories well to maintain themselves.