August 28, 2008

Mr Paswan calls for reclassifying steel as an essential commodity

PTI reported that peeved at steel producers repeatedly hiking prices, Mr Ram Vilas Paswan union steel minister has asked Dr Manmohan Singh to re classify the alloy as an essential commodity, withdrawing DEPB benefits from them and constituting a regulator for the sector.

Mr Paswan, in a letter to the Prime Minister, said that "In the 3 month period since December 2007, steel prices have risen by 20% to 24% and possibilities of setting up a regulatory mechanism for steel and its inputs and re classifying steel as an essential commodity may be considered by the government."

Suggesting a series of fiscal measures against the steel producers for hiking prices of their produce despite repeated appeals, Mr Paswan said that the centre should withdraw export incentives offered to them in the form of Duty Entitlement Pass Book scheme, which if withdrawn would hit the bottom lines of major steel producers by about INR 600 crore.

Mr Paswan said that "The net savings on account of DEPB withdrawal is estimated at around INR 593 crore. Withdrawal of DEPB benefits will make exports less attractive, even though in most cases, export realization will continue to be more than the earnings from domestic sales."

The steel makers currently enjoy DEPB benefits of 5% in galvanized products, 4% in billets, 6% in TMT bars and 4% in hot rolled coils.