NK Singh has a mission - get maximum sops for steel cos

Amiti Sen

New Delhi, Jan 6: Planning Commission member NK Singh has taken up the cudgels on behalf of the ailing steel industry and is examining ways to give a much-needed boost to the sector through fiscal initiatives in the next Budget. He recently held a meeting with chiefs of both the public and private sector steel companies and has drawn up a list of various incentives required to pull the sector out of the morass.

Pointing out that it would be difficult to increase import duty on steel as it was already high compared to the international levels, Mr Singh advised the industry to request the finance ministry not to reduce import duty on steel in the Budget for 2002-03 and maintain them at the current level. Mr Singh also said the industry should also pursue the issue of removal of anomalies in the present duty structure.

At the meeting, Ispat Steel managing director PK Mittal had noted that correction of anomalies in the import duty structure of melting scrap and ship-breaking would not only rationalise duty levels for similar goods but also increase government’s revenue.

Steel demand could be enhanced by accelerating the pace of rural housing by providing direct subsidy or reduction of excise duty on construction items like rods, bars and GI sheets, Mr Singh said. u
The Plan panel might also take up the idea of formulating a scheme for accelerating rural housing, he said.

To increase protection for the domestic industry, Mr Singh suggested that use of non-tariff instruments could be explored. He said various possibilities, including a framework of incentives, should be examined to enhance export capabilities.

The meeting was also attended by steel secretary NN Khanna and the representatives from SAIL, Rashtriya Ispat Nigam, Tisco, Essar, Jindal Steel, Ispal Steel and Planning Commission.

SAIL chairman Arvind Pande pointed out that the five major steel companies had suffered a whopping Rs 1,500 crore during the this fiscal. He also said the government should provide some relief for a two-year period in the form of import-duty protection, re-scheduling of debt and moratorium on financing of new steel plants.

Mr Singh said the suggestion of recalibration of excise duty coupled with short-term deferral of duties with a succinct clause would be examined further. The issue of a debt-overhang was a serious problem, Mr Singh observed. The cumulative investments of all FIs together in the iron and steel sector stood close to Rs 35,000 crore. He said there should be a dialogue between the government, FIs and the industry for arriving at mutually acceptable solutions.