Govt may ease duty cap to help export

Amidst fears that the export duty and bans imposed on pig iron and farm produce like rice are hurting domestic producers, the government is looking at easing some of the restrictions in a bid to save producers from going under.

A recent meeting of the Committee of Secretaries, headed by Cabinet Secretary KM Chandrasekhar, saw the Department of Commerce point out that a number of pig-iron plants are closing down as the export duty imposed on them has made them unviable.

Earlier this August, the government imposed a 15 per cent export duty on semi-finished steel products and a 5 per cent duty on galvanised sheets. However, before a review of the export duty is undertaken, the government will conduct a detailed analysis of the domestic and international prices of iron ore and steel in order to arrive at a more refined decision on the same.

Similarly, the ban on the export of non-basmati rice may lead to closure of some South India-based export-oriented units (EoUs), the commerce department has said. Consequently, it has recommended that rice processing EoUs be allowed to sell their produce in the domestic market.

The commerce department wants rice sales to the domestic tariff area be allowed without payment of any Customs duty. The rules require EoUs to pay Customs duty if goods are sold in the domestic tariff area.

The Cabinet secretariat has asked the commerce department and its agriculture counterpart to work out the modalities of this proposed relaxation.

Export of non-basmati rice was banned in March. In addition, the government had imposed a minimum export price of $1,000 per tonne and an export duty of $200 per tonne on basmati rice.

The commerce department has also proposed to classify the Pusa 1121 variety of rice as non-basmati rice, allowing it to be exported. The country produces 1.5 million tonnes of Pusa 1121, which accounts for around 1.5 per cent of the total rice production in the country.

With the inflationary pressure showing some signs of easing in the recent past, the government is likely to undertake these corrective actions even as it monitors the price situation on products like cotton, steel and iron ore. The wholesale price index-based annual rate of inflation stood at 11.44 per cent for the week ended October 4, declining for the fourth week in running.