Soft stand

New Delhi, Feb. 27: Major steel companies today promised the BJP-led central government that they will hold the price line till after the elections and pass on all duty cuts even as the government slashed excise rates by 8 per cent on non-modvatable varieties of steel.

Steel barons, including SAIL chief V. S. Jain, the Mittal brothers who run Ispat, Essar Steel president J. K. Mehra and top honchos from Tata Steel, promised steel minister B. K. Tripathy to hold the price line and pass on the excise cut.

The round of meetings, which led to all this, culminated with Tripathy meeting Prime Minister Atal Bihari Vajpayee and commerce minister Arun Jaitley with his package to solve the problems caused by rising steel prices.

Domestic steel prices at the retail level have risen by almost 60-100 per cent and by 40 per cent at factory gates over the last year. The increase has been in line with similar hikes in global prices of the metal.

Steel users, mostly small forges and bicycle manufacturers who support the BJP, have been lobbying the Prime Minister to step in and try to reverse the price rise.

Vajpayee had got Tripathy to talk tough to steelmakers to get the big daddies of the industry to agree to this deal on Tuesday itself.

Most of the companies which made the promises — except Tata Steel — had effected a Rs 2,000 per tonne increase in mid-February and will now reduce an equal amount by passing on the excise cut. As Tisco never increased prices, it is unlikely to effect a cut.

V. S. Jain said, “We have always believed in stabilising prices though market forces cannot be stopped either.”

A presentation to the government made by the steel producers, who argued in favour of the excise duty cut, showed that because of the price hikes and the larger volumes of steel being sold now, the duty cut will actually be revenue neutral.

The government has also decided to reduce DEPB payback to exporters on steel exports to discourage sales abroad and to pay a Rs 500-per-tonne subsidy to small scale industries out of the funds with the joint plant committee.

Mehra added, “We have agreed to hold the price line for a certain period despite the increase in input costs.” He, however, refused to specify the period.

Steel companies had been threatening to increase prices further by Rs 4,000 a tonne from March 1. With today's decision, this seems to have been postponed.