The duty hike is the most predictable part of the Swadeshi boons promised to the industry, apart from being a revenue enhancing measure from a sector that contributes more than five per cent of the total customs duty collected by the government. The Centre has estimated customs duty collections of Rs 2285.9 crore from steel imports in the 1998-99 Budget.

The import duties on steel items, which have been systemically pared from as high as 85 per cent in 1992-93 to an average of 35 per cent last year, have been under examination by both the revenue department and the Union ministry of steel for some months now. Even with the special import duties of two per cent and three per cent, the duty on steel is at least five per cent below the WTO bound rate of 40 per cent, stipulated for the year2001-02.

The special additional import duty (SAD) of four per cent imposed in the last Budget, does not count, since it is a countervailing duty. The SAD is also scheduled to be withdrawn on March 31, this year.

The items most likely to attract an import duty in the Union Budget for 1999-2000 are hot rolled (HR) coils, HR sheets, cold rolled (CR) coils, tin mill black plate (TMBP) and drawn wires and galvanised wires. The import duty on cold rolled coils was hiked to 30 per cent to create a five per cent duty differential with its key raw material, hot rolled coils, last year.

The duty on CR coils is now expected to go up further, right up to the WTO bound rate of 40 per cent. The duty on hot rolled coils is expected to move up by five per cent in tandem, to 35 per cent.

A five per cent duty hike is also likely in alloy stainless steel (both semis and bars) alloy steel plates and some structurals like bars.

Value-added products like tinplate, TMBP and galvanised wires may attract a nearly 10 percent hike in customs duty.

The import duty hike was among the measures recommended by the working group on steel, headed by special secretary (banking) C M Vasudev. It has also been among the demands of industry.

``In the past one year we have seen unprecedented dip in world prices with many countries putting up import barriers,'' said Steel Authority of India Limited (SAIL) chairman, Arvind Pande. ``To provide a level playing field, it is important to not only retain the existing level of import duties, but also hike, by an average five per cent import tariffs on steel, still within the WTO bound rates,'' he told ``The Financial Express.''

Essar Steel advisor, J M Bhasin, also felt that an increase in customs duty was necessary to give the home industry time to grow. The industry demand for an excise duty concession on steel, he felt would upset the Centre's revenue targets.

The steel industry contributes nearly nine per cent of the Union government's total excise collections at close to Rs4979 crore.

Jindal Strips vice-president (corporate finance), Arvind Parakh, demanded a ``duty hike on finished steel like cold rolled coils'' because the industry needed time to realign itself with global conditions. He said the home industry did not have a level playing field, since steel-making inputs in the country were far more dear than abroad.

``We pay eight cents as power tariff in the country, but an European steel-maker pays three cents,'' said Parikh. The Confederation of Indian Industry (CII) in its pre-Budget memorandum to the Union Government, has said pretty much the same, blaming the higher input costs of steel-making in India on the administered prices for inputs like power, coal and railway freight.

The Centre has already given adequate proof of its sympathetic ear to the industry in announcing a floor price for six grades of steel imports and in imposing an anti-dumping duty on steel imported from some CIS countries. The final leg-up to the industry is expected to be an nearlyacross-the-board hike in customs duties.

The steady tumble in customs tariff in the last six years, saw steel imports double to more than two million tonne from barely a million tonne. The home industry, which was growing in double digit numbers in the first few years after liberalisation, meanwhile, began to stagnate. The mood at the ``mantralays'' seems to favour pulling on the brakes.