Vajpayee to discuss steel duty cuts today

FM Jaswant Singh, Steel Minister B K Tripathy and Arun Jaitley to meet PM.

The meeting will discuss a set of measures, including permitting duty-free import of pig iron and slashing the customs duty on non-coking coal for metallurgical use from 15 per cent to 5 per cent, proposed by the steel ministry to check a further rise in steel prices.

The ministry had recommended a reduction in the Customs duty on old ships, imported for breaking, from 15 per cent to 5 per cent, even as the countervailing duty of 16 per cent was proposed to be retained, sources in the ministry said.

The ministry has also suggested levying excise duty on the basic price of steel rather than on its stockyard price. Further, a refund of 50 per cent of the excise duty paid by steel mills on sales to identified infrastructure, commercial and housing projects had been proposed, the sources added.

The duty-free import of pig iron is expected to benefit small steel manufacturers by reducing their input costs. However, due to the global shortage of pig iron, small steel producers were unlikely to benefit much from the cut, industry sources pointed out.

The reduction in the import duty on non-coking coal will bring it on a par with that on metcoke, which was cut from 10 per cent to 5 per cent on Tuesday. The rollback of the duty on ships imported for breaking could reduce the price of scrap in the country, though it falls short of the steel industry's demand for duty-free import of scrap.

The sources said metcoke and non-coking coal importers had assured the government of passing on the benefits of the duty cut to consumers.

Commerce department officials said the notification on freezing of duty entitlement passbook (DEPB) benefits to steel exporters was expected after tomorrow's meeting. The government is also considering canalisation of iron ore imports for extracting higher metcoke quotas from China, which needs Indian ore for its steel plants.