In an effort to incentivise steel exports, the government may soon restore the duty entitlement passbook scheme (DEPB) for the industry, according to official sources.
Responding to the steel sector’s demand, the Ministry of Commerce is understood to have forwarded the proposal to the Committee of Secretaries (CoS), they say. “It is now up to the CoS to take a call,” said a senior official in the steel ministry.
Under the DEPB scheme, companies can avail of refund of Customs duty paid on imported raw material for manufacturing products meant to be exported under the norms of the Directorate General of Foreign Trade. The government had in mid-June withdrawn the benefits for the steel sector to control inflation and to augment the domestic supply of the commodity.
Now that there is a slump in demand for steel and prices have fallen steeply due to the ongoing global recession, the industry wants the scheme re-introduced. It also wants the 15 per cent import duty on steel to be re-imposed to ward off cheaper shipments from China and Ukraine.
“Even if there isn’t much scope for steel producers to export now because the demand has fallen, the DEPB benefits will surely help the industry when the international market conditions improves,” said a senior official of a steel company.
The restoration of the scheme would come as a respite for steel companies, which have long-term export commitments, he added.
In India, almost all steel producers used to avail of the DEPB scheme till it was withdrawn. The DEPB rate normally varies between 2-8 per cent on iron and steel items.