The mid-year bonanza for the steel industry is an answer to prayers for fiscal concessions to bail out steel producers in a year of recession. A global recession in the industry has resulted in a dramatic downside in import prices. Hot rolled coils prices have, for instance, dropped to roughly $ 200 a tonne, from $ 395 a tonne, a year ago.

The progressive roll-back of customs duties (now at roughly 30 per cent for most grades of finished steel) compels steel companies at home to peg domestic prices to the landedprice of similar products. The late start to infrastructure projects has practically stagnated the demand for the silvery alloy within the country.

The result has been a poor demand for steel, low prices and sinking bottomlines of steel companies. Most steel producers, including industry leaders Steel Authority of India Limited (SAIL) and Tata Steel have reported lower profits than before.

Last month steel minister Naveen Patnaik decided to champion the cause of the industry, now in doldrums and led a large delegation to finance minister Yashwant Sinha. The finance minister heard out the plea for fiscal sops, including a reduction in excise duty for construction grades of steel and in customs duty for steel plant raw materials not available in the country.

He then set up an inter-ministerial committee, headed by special secretary, banking, C. M. Vasudev, which incidentally, submitted its report on Friday. North Block's blessings come to the steel industry, at a time when it is grappling with, what itbelieves to be, an uneven competition from overseas.

An anti-dumping petition filed by steel-makers, led by the Steel Authority of India Limited (SAIL) and Essar Steel, was not found tenable by the Union commerce ministry in its preliminary investigations. Even as the final verdict on the dumping duty on hot rolled coils from CIS countries was awaited, steel companies petitioned the Union government for a trigger price mechanism to check unfairly cheap imports.

The trigger price mechanism, automatically imposes a tariff barrier against unfairly cheap imports, by levying a duty on all imports below a particular reference price. The steel ministry supported the proposal, pointing out that the long-drawn-out procedures for investigating anti-dumping petitions did not give the home industry the kind of protection it needed in a free market.

The commerce ministry, for instance, is still investigating dumping charges brought against CIS steel imports during the 1995-96 fiscal. The trigger price mechanism wasdiscussed at length by the C. M. Vasudev committee, which consulted financial institutions, steel-makers and the ministries of steel, commerce and the department of revenue in turns.

The trigger price, which was recently introduced in Mexico, found favour with most sections of government, barring some, who felt that the system may not quite be in tune with the World Trade Organisation (WTO) agreement.