International BusinessStainless steel ind wants cap on exports to be removed
The domestic stainless steel industry has demanded removal of value cap on exports of the alloy with an aim to increase shipments which were hit hard by the global economic crisis.
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The Indian Stainless Steel Development Association (ISSDA) has shot off a letter to the Commerce Ministry seeking removal of such a limit on the shipments so that the exporters get full benefit of the incentives under Duty Entitlement Passbook Scheme (DEPB).
"It is our request that the value cap applicable on stainless steel be removed," ISSDA President N C Mathur said in the letter.
Under DEPB scheme, companies are entitled to avail refund of customs duty, supposed to have been paid on imported raw material for manufacturing of products meant to be exported under the norms of the Directorate General of Foreign Trade.
At present, the government offers about 5 per cent DEPB benefit over the value cap fixed on the stainless steel items.
For example, cold rolled flat products, which are exported at Rs 130-140 a kg (FOB), get 5 per cent DEPB benefits at the fixed value cap of Rs 86 per kg. Now the industry is demanding removal of the cap so that the benefit could be given on export rate of Rs 130-140 a kg.
The stainless steel industry feels that the value cap on the exported items should be withdrawn so that exporters can avail full benefit of the DEPB scheme, and thus ship more products.
Moreover, justifying its demand for abolishing the limit, the industry said the cap, levied two years ago, has now become redundant as the high raw material cost has already pushed up the rates of the alloy.
"The exporter completely loses the DEPB credit on the extra cost incurred by him (on account of high input cost) for production of such stainless steel grade, in view of the existing value cap," he said.
Nickel prices have fluctuated between $9,500 a tonne and $54,000 a tonne in the last two years thereby pushing up the cost of production of the alloy, it added.
JSL Ltd, the country"s largest manufacturer of the alloy, saw its exports plunging by half to Rs 850 crore in the last fiscal against 2007-08 levels, the industry claimed.