Apart from these finance-related structural changes, the government would have to give a fillip to increase steel consumption. The development ofinfrastructure projects should be given a top priority. Government spending should be on areas like roads, railways, bridges, dams, power and other projects. This will not only increase the demand for steel and thus help reduce the supply-demand mismatch, but will also give a boost to the general economy. Increasing demand through legislative process is also the need of the hour.

FE: Are you looking for any changes in the tax structure in the forthcoming finance bill?

NKJ: Essentially we would like change in the calculation of MAT. The export profit for the purpose of MAT under section 115 JA of the Income Tax Act of 1961, should be based on book profit and not on the basis of computation of the income under the Act.

FE: What sort of change in the import duty structure can aid the revival of the steel industry?

NKJ: The basic policy of the government should be aimed at reducing steel imports. If the domestic industry is suffering, the country cannot afford imports. Even acountry like the US is talking about restricting imports. In his State of the Union address, US President Bill Clinton has warned the Japanese government that if the sudden surge of steel imports from Japan was not resolved, America would respond.

Secondly, zinc being a base metal and currently not being manufactured in sufficient quantities domestically, the import duty should be reduced from the current level of 35 per cent. Thirdly, there should be a reduction in the import duty on non-coking coal with an ash content of less than 15 per cent. The latest state-of-the-art technology allows the flexibility of using non-coking coal with ash content less than 15 per cent which is cheaper.

FE: Domestic exports have been at an abysmal low. What policy initiative can help boost Indian steel exports?

NKJ: Policy initiative is required from the government on several fronts.

a) Duty credit rates under the DEPB scheme have to be revised upward for value-added galvanised plain (GP) andgalvanised corrugated (GC) products and colour-coated sheets.

b) Procedure and documentation need to be simplified further for both advance licence and DEPB.

c) The DEPB scheme being simpler and easier to operate, benefits under the scheme should be at par with those under the advance license scheme.

d) In case of steel plants, it takes a minimum 36 to 48 months to install, commission and produce exportable goods. The EPCG scheme stipulates fulfillment of export obligation within eight years from the date of the EPCG license, whereas by the time a steel plant is functional, almost three to four years would have normally expired. Hence, for the steel sector, at least a three-year moratorium must be granted.

e) Due to the continuous trend of declining prices of steel products, as it is the EPCG licence holder will have to export at least double the quantity to meet the same value of export obligation by export of value-added products. Even without the restriction of a 50 per cent valueaddition, the objective of liquidating and fulfilling the export obligation is served. Hence, the 50 per cent value addition clause should be deleted.

f) Supplies to another manufacturer/exporter under deemed export should be considered at par with physical exports.

FE: Finally what changes, if any, would you like the government to make on excise duty structure?

NKJ: The restriction on claiming Modvat to a maximum of 95 per cent of the modvatable amount should be amended to allow 100 per cent Modvat. Further, the government should consider reducing the excise duty on galvanised products from 15 per cent to five per cent considering that these are mainly used in the rural sector.