DECEMBER 16: Floor prices on imported primary steel, imposed in December last year to protect domestic industry, would be withdrawn from December 31, 1999, Minister of State for Commerce and Industry Omar Abdullah said today.However, floor prices for imported steel seconds would continue, he told Rajya Sabha replying to a half-an-hour discussion on import price of steel items. "The floor price was an emergency measure to protect the Indian industry at a difficult period. It is not required now," he said.The Minister said the Centre would continue to maintain the minimum import price for seconds to protect the domestic industry. Intervening during the discussion, the Minister for Commerce and Industry Murasoli Maran said the ministry would consider imposing the floor prices again if there were new circumstances and if the steel ministry recommended such a measure.Abdullah said even without the floor prices the government would be able to protect the domestic industry against cheap imports by using anti-dumping measures. The government had lowered the floor price in November this year in view of the improved steel scenario.Despite the floor price, imports of hot-rolled coils have shot up 29 per cent in the first two months of the second quarter over the April-June period, making a mockery of the floor price mechanism. While the average price of these imports is around $230 a tonne, prime grade HRC have been imported at prices as low as $213 per tonne in August - against the ruling international price of $280-285 per tonne and the domestic floor price of $302 a tonne.The latest figures available from industry associations reveal that while the average import price of HR primes was $248 a tonne in April, it has declined to $219 and $213 in July and August, respectively. In volume terms, while an average of 33,352 tonne of HRC were imported in the first quarter, the figure has jumped to an average of 43,180 tonne in the July and August.Industry sources attribute the increasing imports at cheaper prices to the advance licence route where the floor prices are not applicable. Imports under the advance licence route comprised nearly 78 per cent of total HRC imports in the first five months, industry figures show.Senior industry officials said: "The influx of cheaper imports is the primary reason why domestic prices have not increased in line with the rise in international prices. The same products available in India are being imported at cheaper rates by getting around the floor price mechanism."Cheaper imports had come into India even since December, when the existing floor prices were imposed by the DGFT. Industry figures show that imports of sheets and coils had increased from 30,000 tonne in December last to 51,000 tonne in March - almost 86 per cent of which were routed through the advance license scheme.At the time of imposition of floor price in December last, the government left a grey area in the notification by keeping imports under advance licence schemes outside the ambit of the floor price. Any importer having an advance license can use it for further processing. As a result, hot-rolled sheets can be bought at international prices under advance license and later processed into cold rolled sheets, plates or galvanised sheets for exports.The total investments in the domestic steel sector is estimated to be over Rs 91,000 crore, and of the Government's total investments, around 15 per cent is said to be invested in the steel sector alone - Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd and others.
