The representation, under the aegis of Indofer, the newly-formed association of flat producers that include Essar, Ispat, Jindal and Lloyds, suggests a series of measures to keep in check the inflow of steel imports, well below their respective floor prices.

Almost 78 per cent of these imports have come in under the advance license scheme, and Indofer has highlighted several loopholes in advance license scheme which has made the floor price mechanism redundant.

In the first five months of the current fiscal close to 1.45 lakh tonnes of HR primes have been imported at an average price of $229 a tonne, against a floor price of $302 per tonne. The average price of imports in July and August was $219 a tonne and $213 a tonne, respectively.

According to the advance license scheme, the exempt material cannot be disposed or utilised in any manner locally, and have to be exported within a time frame of 18 months. Besides, companies keep on extending the time limit.As normally steel companies do not have more than one month of inventory, Indofer has recommended that the period should be reviewed and changed to three months, instead of 18 months, and extension of the limit should not be allowed.

As imports can be brought in through 14 points in the country, which makes it difficult to monitor, Indofer has also recommended that imports should be allowed through only 2-3 ports.

However, if Indofer's plea is accepted by the government it would call for a review of the country's import policy as imports through the advance license scheme is applicable to the entire range of industries and to the steel sector alone.

The suggestion to equate benefits of deemed exports to those of physical exports have been prompted by the fact that the same material is abundantly available in the country.

Besides directly benefiting steel companies to meet their export obligation, it could also put a significant curb on imports through the advance license route.

Imports through the advance license scheme is expected to rise further as increasing number of greenfield projects are coming under implementation. Indofer expects a demand of about 10.5 million tonnes of steel to be fulfilled through the advance license route.