Steel makers, users agree on duty cut

A consensus is emerging between steel makers and downstream users on the issue of Customs duty on steel imports. The Indian Steel Alliance, which represents the country's top steel producers like Steel Authority of India Ltd, Tata Steel and Essar Steel, is likely to agree with steel users on the demand for a reduction in the Customs duty on hot-rolled and cold-rolled coils in the Budget for 2003-04.

"An agreement will be reached soon. But the steel alliance may agree to a lower cut than that demanded by downstream users," a source close to the development told Business Standard. Downstream steel users are demanding a cut in the import duty on hot-rolled steel to 10 per cent and cold-rolled steel to 15 per cent, from 25 per cent.

The country's leading steel producers and downstream users have been at loggerheads for over an year. With steel producers raising hot-rolled coil prices regularly, cold-rolled steel companies and other industries like automobiles and consumer electronics have been clamouring for a reduction in the import duty on steel.

But steel makers have resisted any change in the import duty on the grounds that the price rise is in tandem with international prices and the existing prices are still lower than the peak prices of 1997.

But now the Indian Steel Alliance may soften its stance. The capital goods industry and downstream users have raised five demands for the forthcoming Budget.

The steel alliance has decided that not to object to four of these: a progressive reduction in the peak Customs duty from 25 per cent to 20 per cent, removal of the "zero import duty" category of project imports, retention of 5 per cent and 10 per cent duty on project imports and a new 15 per cent Customs duty on project imports where Cenvat benefit is not available to equipment manufacturers.

Though originally opposed to the demand for a cut in import duty on hot-rolled steel to 10 per cent and cold-rolled steel to 15 per cent, there are now indications that the Indian Steel Alliance may agree to it.

Consensus on the cards

• Downstream steel users are demanding a cut in the import duty on hot-rolled steel to 10 per cent and cold-rolled steel to 15 per cent, from 25 per cent
• Steel makers, however, have been resisting any change in the import duty on the grounds that the price rise is in tandem with international prices and the existing prices are still lower than the peak prices of 1997
• The Indian Steel Alliance, which represents the country's top steel producers like Steel Authority of India Ltd, Tata Steel and Essar Steel, is likely to agree with steel users on the demand for a reduction in the Customs duty on hot-rolled and cold-rolled coils