Domestic steel producers led by the Steel Authority of India (SAIL) have approached the steel ministry against duty-free steel imports by engineering exporters under the advance licence route.
The companies have proposed an alternative scheme for the supply of domestic steel to the exporters.
Engineering exporters have over the last few years been resorting to duty-free imports of seconds, at rates far lower than the import ceiling imposed earlier, thereby putting significant pressure on domestic steel prices.
Currently, the exporters concerned are issued advance licences for duty-free import of steel products of any category (including seconds and defectives) based on their export orders. The licence allows imports within 18 months from the date of the licence. Also, there is an option of trading these licences.
Senior industry sources said, "It is indeed ironical that at a time when indigenous prime steel is available in plenty, the domestic engineering exporters are resorting to imports."
"Moreover, most of these imports are reported to be in the seconds and defects grades. In order to meet the full requirement of the engineering exporter we have drawn up a mutually beneficial scheme," they said.
According to the suggested scheme, against the advance licences the required prime steel would be supplied to the engineering exporters by domestic producers at international rates.
Such supplies should be treated as deemed exports and besides other DEPB benefits, the excise duty on the quantity supplied to the engineering exporters should be exempted from excise duty.
The domestic producers have also urged that import of seconds and defectives should be banned under the advance licence route considering the availability of standard grades in the domestic market and keeping in mind the quality image of India exports.
During the last year, around 4.5 lakh tonne of steel under various categories of hot-rolled (HR), cold-rolled (CR), GP/GC, tinplate and electrical steel sheets were imported duty free under the advance licence route.
According to analysts, the steel industry in India is in dire need for government support. Apart from policy changes, there is an urgent need for government spending considering the economic slowdown.
