December 03, 2008

Ban on steel exports can hurt economy – ISA

PTI reported that, amid the government move to ban exports of finished steel, steel producers said that curbs on shipments could lead not only to bleeding of their coffers but also to a loss about INR 20,000 crore to India in foreign exchange earnings.

Mr Moosa Raza president of Indian Steel Alliance said in a letter to Dr Manmohan Singh said that "A major part of exports of steel consists of products which do not have a domestic market or are surplus to domestic requirements. This material will become an immense idle inventory, adding to woes of the industry."

Mr Raza said that with export price at about INR 1,100 to INR 1200 per tonne, FOB and domestic ex works price prevailing around USD 850, the incremental USD 200 to USD 250 margin translates to INR 4,000 crore of loss per million tonne on an annualized basis with current exports at about 4.5 million tonne per annum.

He said that total percentage of steel exports is not more than 6% to 8% of total domestic production. He added that "Would a total ban on the export of steel make steel available in significant quantities within the country to ease inflationary pressures?"

Mr Raza further added that with a blanket ban on exports, what would happen to the steel which has to be produced or to the equipment established which would be rendered idle and in fructuous. He asked "Will it not be a direct loss to the national economy?"