New Delhi, Oct. 31: The government today provided export incentives to steel makers as shortages of the product diminish in the domestic market.

It has withdrawn the 15 per cent export duty on certain products such as pig iron, steel ingots, bars and rods, while maintaining the levy on scrap metal.

These duties had been imposed in May this year to increase the availability of steel in the domestic market and check rising prices.

With inflation falling, the government has decided to remove the curbs.

The government has also removed a 15 per cent duty on the export of iron ore fines and replaced it with a flat tax of Rs 200 per tonne.

For iron ore lumps, the duty is unchanged. The finance ministry said the changes would take effect from October 31.

According to finance minister P. Chidambaram, “It is the appropriate time to withdraw the export duty on certain iron and steel products.”

International steel prices have fallen to around $700-800 per tonne from a high of over $1,400.

The steel industry had sought a 15 per cent import duty. In return, it pledged not to increase prices for the next six months.

Producers also wanted the government to scrap the 15 per cent export duty on long steel products and levy a countervailing duty.

Their demands also included a cut in excise duty to 8 per cent from 14.4 per cent and benefits of the duty entitlement passbook scheme for exporters.

The wishlist was placed during a meeting of the major producers, including SAIL, Tata Steel, Essar and JSW Steel, with steel minister Ram Vilas Paswan earlier this month.

Paswan said steel companies co-operated when the government had asked them to cut prices. “Now that the prices have crashed, we will consider measures to help them,” he said.

Domestic steel manufacturers have not increased prices since May 7 to help the government check rising inflation.

“Steel prices have shown a downward trend in the last one month and the contribution of steel to inflation has also declined,” Amit Mitra, secretary-general of the Federation of Indian Chambers of Commerce and Industry, said.

The government has also decided to abolish the 5 per cent customs duty on aviation fuel.

It has imposed a basic customs duty of 5 per cent on ferro-molybdenum and ferro-vanadium to protect the domestic industry.