Stainless steel makers want duty sops back

Indian Stainless Steel Development Association (ISSDA) has urged the ministry of steel to restore the Duty Entitlement Pass Book (DEPB) scheme for stainless steel and alloy steel items saying it was vital to save the export-driven industry from disaster.

The apex body of stainless steel makers said that while the domestic production of stainless steel and special alloy steel was about 1.15 million tonne, total domestic consumption was about 590,000 tonne, which leaves 560,000 tonne for exports.

"There is no short supply of stainless steel and special alloy. There is, in fact, surplus capacity of nearly 100 per cent of domestic demand," ISSDA President N C Mathur said.

He said the move to suspend the DEPB credit on exports of steel would cripple the sector, which does exports of over Rs 4,000 crore annually.

Mathur said the move to club stainless steel with the general category of the metal and removal of export incentives was made as per the recommendation of the finance and commerce ministries without any proper consideration about its implications.

The steel ministry had not recommended any change in duty for stainless steel and alloy products and had only sought suspension of the DEPB scheme for non-alloy steel.

With the suspension of the DEPB credit, the companies would have no option but to sell their products in the domestic market.

This would result in overcapacity and will finally lead to shakeout of the industry, which comprises about eight organised and 30 small and unorganised companies.

There are over 40 large, medium and small stainless steel downstream processors who produce value-added items all over the country.

The sector exports its total production and the pricing is fully determined by DEPB rates, whose removal would completely wipe out this segment, Mathur added.

Of the total 32 million tonne of steel produced in the country during 2003, stainless steel accounted for only 1.15 million tonne. But, being a high-priced product, its contribution to the exchequer was more.