Paswan asks PM to re-classify steel as an essential commodity

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New Delhi (India): Peeved at steel producers repeatedly hiking prices, Steel Minister Ram Vilas Paswan has asked Prime Minister Manmohan Singh to re-classify the alloy as an essential commodity, withdrawing DEPB benefits from them and constituting a regulator for the sector.

"In the three month period since December 2007, steel prices have risen by 20-24 per cent...possibilities of setting up a regulatory mechanism for steel and its inputs and re-classifying steel as an essential commodity may be considered by the government," Paswan said in a letter to the Prime Minister.

Suggesting a series of fiscal measures against the steel producers for hiking prices of their produce despite repeated appeals, Paswan said the Centre should withdraw export incentives offered to them in the form of Duty Entitlement Pass Book (DEPB) scheme, which if withdrawn would hit the the bottom lines of major steel producers by about Rs 600 crore.

The DEPB for the steel makers is slated to end this month.

"The net savings on account of DEPB withdrawal is estimated at around Rs 593 crore. Withdrawal of DEPB benefits will make exports less attractive, even though in most cases, export realisation will continue to be more than the earnings from domestic sales," Paswan said adding that his Ministry made this recommendation to disincentivise steel exports.

The steel makers currently enjoy DEPB benefits of 5 per cent in galvanised products, 4 per cent in billets, 6 per cent in TMT bars and 4 per cent in hot rolled coils.

Paswan pointed out that rise in prices of long steel products have increased 24 per cent, while those of flats rose between 20-22 per cent.