Steel producers see no scope for duty cut

The Indian Steel Alliance, an association of the country's top hot-rolled coil producers, yesterday said there was no scope for the government to bring down the import duty any further on hot-rolled coils. "Protection has reached rock bottom," ISA president Moosa Raza told Business Standard.

Raza was reacting to the announcement made by Finance Minister P Chidambram late last evening that the import duty on steel would be cut in order to rein in inflation.

However, steel industry experts pointed out that with the current global steel prices ruling high, any cut in the import duty is unlikely to impact local hot-rolled coil producers.

"Prices of hot-rolled coils are now in the range of $600-750 per tonne depending on the grade you want and the market you are in," industry sources said.

Chidambram had also asked the manufacturers not to raise the prices any further. Some hot-rolled coil producers said they had no plans to raise the prices in the near future.

"We have agreed to raise the prices only once a quarter. The current prices of Rs 25,000 per tonne will hold till October 1," a leading hot-rolled coil producer said.

Arguing against any cuts in the import duty, Raza said the existing duty of 10 per cent was recommended by the Kelkar Committee for the next year.

"We have reached the suggested duty rate in 2004 itself," he said.

Raza also said the country's hot-rolled coil producers had already seen duty protection being brought own by two-thirds this year. "In the space of five months, between February and July this year, the import duty has been brought down from 30 per cent to 10 per cent. The duty today is one-third of what it was at the beginning of the year," he added.

However, downstream steel companies welcome the decision and said steps should be taken to curb the export of hot-rolled coils and improve the local availability of the metal.

"The world over there is a shortage of hot-rolled coils. Countries are putting restrictions on exports. We should do the same," Corsma president S C Mathur said.