Tuesday, April 15, 2008

Indian Steel export ban may hit reputation as supplier.

The impending ban on export of steel scheduled to be taken up by the Cabinet Committee on Prices (CCP) on Tuesday - has triggered concerns in the commerce department. With the export of non-basmati rice and cement already banned, officials of the department feel that India’s reputation as a reliable supplier would be hit if the trend persists. While the official line is that taming inflation was the top priority, it is felt that exports are becoming a victim of the government’s strategy to bring down prices.

“In the case of agri exports, the primary concern over the years was the ‘today-off tomorrow’ policy which has led to lack of stability. Now, the same trend is creeping into other sectors. This is not good for India’s exports,” a senior official said. The flip-flop policy has prevented India from emerging as a major player in agri exports despite a huge production base, they added. Wheat, rice, sugar, onion and pulses are among items that faced export ban during recent years.

The concern in the case of steel is more since India exported close to 5 million tonnes of value-added steel (including colour-coated sheets and galvanised pipes) valued at around $4 billion during the first three quarters of 2007-08.
India also imported 5.7 million tonnes of steel during this period.
The government should consider ‘voluntary restraint’ by the steel industry rather than banning exports, officials of the commerce department feel. However, steel ministry is understood to be pushing for a ban and the final decision wrests with CCP. Moreover, there is an opinion that it is not necessary to bar export of all types of steel. Long products, for example, are the ones that are used for construction and prices of this variety have been shooting up. On the other hand, there are items like flats that have only 0.3% weightage in the wholesale price index.


Read the full story at the Economic Times

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