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Govt mulls 5% higher export cess to tame steel prices The government may take another set of fiscal measures to check surging steel prices. It is considering increasing export cess on long steel products from 10% to 15%. An increase in cess would improve its availability in the domestic market and check price rise of the products used for construction activities. A proposal in this regard has been approved by the committee of secretaries (CoS), and the finance ministry is expected to notify the changes soon, a source said. The proposal to increase export cess on long steel products is likely to be accompanied with a fiscal package for the sector that would include withdrawal of the cess on a host of other products. “At its meeting on May 30, the CoS approved a proposal to increase export cess on long products from the recently-imposed level of 10% to 15%. The decision may now be notified by the finance ministry along with other fiscal measures, withdrawal of duty for other steel products like flat and galvanised products and steel pipes and tubes — approved for the steel sector,” an official source said. The decision for long products may largely impact export of construction-grade steel such as bars and rods. Of the 4.5-million-tonne steel exports, long steel products constitute less than 0.75 million tonnes. However, the government feels the consumer is more sensitive to a price rise in this product category than others, hot- and cold-rolled coils, which are used for industrial applications. “Higher export cess for construction steel is required as nearly 70% of its production is contributed by secondary sector which is fragmented and sensitive to market sentiments. Rising international prices of semi-finished steel, pig iron and other long products can easily encourage domestic producers to export which may adversely affect domestic availability and prices,” the source said. Along with increase in duty for long products, CoS has approved withdrawal of duty on several steel products including a 15% ad valorem duty on iron ore. Withdrawal of duty was also considered earlier at a meeting of steel producers with the prime minister where there was broad agreement that export cess on steel would be withdrawn as the industry agreed to reduce steel prices to support government initiative to check inflation. The government recently imposed 15% export duty on hot-rolled steel products, 10% on cold-rolled steel products, pipes and tubes, and 5% on galvanised sheets to disincentivise exports and contain the domestic demand-supply gap.