When it comes to steel prices, clearly the government is not leaving anything to chance. In a tough stand, the Centre has asked steel companies to furnish a written undertaking that they would hold prices for the next three months and not export at the cost of the domestic market. Further, it also wants the firms to provide an outlook with regard to prices and exports for the fiscal.
The companies had earlier assured the government that they would not enter into fresh export contracts in order to temper domestic prices. According to sources, only once companies individually submit their written undertakings to the steel ministry would it draft a proposal to roll back the export cess recently levied in the range of 5-15% on steel products and forward it to the finance ministry.
?This is a most retrograde step. Even in the control days, the government never issued such directives,? said an obviously piqued steel company official, adding, ?In the past we have always acceded to a request by the government to hold prices, even if it was against market movements.?
The government recently notified the export cess on steel, which was proposed to check domestic prices in the backdrop of climbing inflation. A 15% duty has been levied on pig iron, lumps, pellets, scrap and hot-rolled products; 10% on cold-rolled bars, rods, tubes and pipes; and 5% on galvanised products.
Steel companies viewed the notification of the export cess as a sign of betrayal. On May 7, when the steel ministry succeeded in arm-twisting them into slashing prices of HR coils by Rs 4,000 a tonne and reinforcement bars by Rs 2,000 a tonne, the companies had been given to understand that the duty would not be notified or that it would be considerably softened.
Steel secretary RS Pandey had said at the time that ?the decision on levying export cess (included as part of the Finance Bill) had gone to the President for assent by the time the ministry sat with steel producers to finalise price cuts. This resulted in the export duty being notified. We have, however, taken up the issue with the finance ministry, which would examine whether the notification could be reversed.?
However, later finance minister P Chidambaram said that he had not received any proposal from the steel ministry regarding a reversal of the duty.
