The Telegraph
Since 1st March, 1999
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Govt sweats to hold steel price

New Delhi, March 10: The BJP-led central government is calling top honchos of the steel industry for another round of meeting on Monday to ensure that they stick to the promise of maintaining the price line till the elections are over.

The meeting has become necessary as the government is unable to keep to a verbal quid pro quo it had promised. At an earlier meeting, steel barons had agreed to reduce prices if DEPB pay-backs were resumed.

Steel-makers had agreed to the price reduction of Rs 1,500-2,000 a tonne after the government had said it would grant the duty pay-backs.

Steel minister Braja Kishore Tripathy has been unable to do this mainly because Punjab steel foundries, which had earlier forced the government to put pressure on Tata Steel, SAIL, Essar, Ispat and Jindals to either reduce or hold on to their prices, are still complaining that the reduction is a farce and an eye-wash.

The Punjab lobby, a traditional supporter of the BJP, has complained to the Prime Ministerís Office afresh and asked the top leaders to ensure that DEPB pay-backs on steel exports are not allowed.

Their aim is to force steel producers to sell all their steel in the domestic market. In fact, steel users are lobbying hard to ban all steel exports, a move which the government is not too enthused about.

Besides the Punjab factor, Tripathy is also scared that the Election Commission might come down on any decision to give duty sops to the steel industry, terming it as a politically motivated move. The government will promise the steel-makers that it will grant the duty pay-back if it is voted back to power.

Not that the DEPB pay-back of duties is affecting the steel industry much as global prices are still higher than domestic prices and fetching steel exporters a handsome return.

The steel industry, on its part, is planning to shed tears about the rising cost of production, especially increasing iron-ore prices.

Big steel-makers like Essar and SAIL say the price hikes they have been effecting are justified as prices of raw materials have gone up by multiples of 100 per cent in the last one year. The Indian Steel Alliance, a grouping of all the big producers, argues the cost of coke has gone up 300 per cent, iron pellets 200 per cent and sea freight by another 300 per cent.

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