Singh fixes steel DEPB rates

Finance Ministry again overrules Commerce Ministry on export sops.

Prime Minister Manmohan Singh intervened yesterday to ensure that the Duty Entitlement Passbook Scheme (DEPB) rates for steel were fixed at February prices. Commerce and Industry Minister Kamal Nath had met the Singh to discuss the issue.

The issue of granting benefits to steel exporters under the DEPB "" a popular duty neutralisation scheme had remained unsettled for some time with the Finance Ministry in favour of adjusting the DEPB rates on the basis of Free-on-Board (FOB) prices prevailing in February 2004 when the DEPB benefits to steel items were withdrawn.

These benefits were restored after the Budget. The Commerce and Industry Ministry is of the view that adjustment of the DEPB rates should be done on the basis of the prevailing rates. The fight has been on fixing value caps for 32 steel items, 24 of which are to be covered for the first time and for 570 engineering items.

This is the second time that the Finance Ministry has managed to overrule the commerce ministry on DEPB rates. The first time was on textiles rates.

The Commerce and Industry Ministry had been asked to reduce the DEPB benefits on 83 textile products by 45 per cent across the board overruling the ministry's proposal that the cut should not be more than 30 per cent since the textile sector would be facing a quota free regime from January 1, 2005.

The textiles ministry had in fact sought the continuation of the benefits without any cuts.

The rates on cold rolled non alloy/alloy steel sheets, hoops, wide coils has been cut from 15 per cent to 4 per cent.

The value cap has been fixed at Rs 26.5 per kg. Rates of hot rolled galvanised non alloy steel sheets and hoops have been cut from 12 per cent to 3 per cent and the value cap has been fixed at Rs 22 per kg.

DEPB rates for heat shrinkable dry type outdoor termination were reduced from 14 per cent to 11 per cent, on electric pedestal fans from 10 per cent to 7 per cent, on fluorescent tubes, 250 watt HPMV and HPSV lamps from 14 per cent to 10 per cent.

The rates on scooters, motorcycles and mopeds in completely built units, semi knocked down units and completely knocked down units have been cut from 14 per cent to 9 per cent, on brake shoe plates from 16 per cent to 3 per cent and on crank shafts for four-wheelers and two-wheelers from 12 per cent to 2 per cent.