New Delhi, Oct. 10: The government has decided against ratcheting down customs duty on steel right now.
Commerce minister Arun Jaitley and steel minister Braja Kishore Tripathy decided at a meeting held earlier this week that they would not ask the finance ministry to bring down customs duty on steel imports.
The decision against import duty reduction comes on the back of press reports of a possible cut in steel import duty to discipline local producers who were accused of jacking up steel prices to the detriment of steel users.
Newly-appointed steel secretary V. K. Duggal had first mooted the idea of a duty cut some weeks back, but later issued a retraction after a volley of protests orchestrated by steel producers.
It is believed that Duggal was pulled up for speaking out of turn. Sources said Duggal who was supposed to lead a high-powered delegation of steel CEOs, including Steel Authority of India chairman V. S. Jain, Indian Steel Alliance head and former Tata house stalwart J. J. Irani, Tata Steel chief B. Muthuraman and Essar director J. Mehra, to China on October 14 has at the last moment not been cleared by the cabinet secretary and the Prime Minister’s Office.
Instead, a junior officer — joint secretary J. P. Singh — has been asked to take over. This is normally not done when top ranking CEOs like Jain, Irani or Muthuraman are sent as part of a government-sponsored delegation to foreign shores. This is being read as a direct snub to the steel secretary.
Not that the government was not interested in trying to discipline steel prices. With thousands of crores of central funds committed to infrastructure projects like the Golden Quadrilateral highway project, the 20-30 per cent fluctuation in steel prices has meant budgets going awry. This year has proved to be one of the most volatile years for steel prices. Global steel prices moved between $200 and $300 per tonne of finished steel. Indian prices followed global trends and remained at near equal levels.
However, sources say the steel secretary seems to have over-stepped his brief. He had been asked to try and use moral suasion to get steel producers to calibrate price hikes and not police them with threats.
Steel users have been demanding stringent action. Ajit Gulabchand, head of the Construction Federation of India, has written to Prime Minister Vajpayee pointing out price hikes in steel have adversely hit infrastructure development schemes and asking for duty-free imports. Currently, average import duty on steel stands at about 25 per cent.