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Govt move to block inflow of `seconds' steel

G. Rambabu

NEW DELHI, May 28

THE Government has decided to tighten the screws on imports of `seconds' and defective hot rolled (HR) steel products, tinplates and electrical sheets.

According to official sources, in a move to regulate the inflow of defective steel products which are being surreptitiously used in place of `prime' products, leading to largescale safety and health hazards, it has now decided to act tough.

``There are three lines of action that are being considered. The first is to place these items on the restricted list (RL), the second is to resort to a differential pricing system and the third is to continue with the floor price mechanism,'' the source s said.

Either of these should act as an effective deterrent to the imports of the defective steel products, which now account for more than 90 per cent of the total steel imports, they said.

Further, they noted that a decision has also been taken to designate a few ports where the permissible imports of seconds/defective steel items can be received. Imports of these items through any other port will not be allowed. At the same time the vigil ance at the designated ports would be strengthened, they said.

The ports that are most likely to be designated are at Mumbai, Chennai and Calcutta. All seconds and defective steel items will have to be routed through these ports. That should be enough to regulate the inflow of these imports, the sources said.

The sources noted that a decision is yet to be taken on the choice of the three courses of action that are being considered.

It may be a difficult decision to place these imports on the restricted list. As ``we are opening up our economy, efforts are being made to decrease the items on the RL.'' It may, therefore, be unwise to place more items on this list. In all possibility the idea of placing these items on the RL may be the last option.

The second option of resorting to a differential pricing system seems more viable. Under this system, while the prime steel products will attract a single duty rate, the seconds/defectives will face a higher duty of around 30 to 40 per cent. This should act as a barrier to those who are importing cheaper defective steel products, the sources said.

The third option that is being considered is that the floor prices that were introduced one-and-a-half years ago will be hiked. Although there was a controversy over whether floor prices are incompatible with the WTO regime, the Government has realised t hat for seconds and defective imports there is no such bar.

``Floor prices have been under force since the past one-and-a-half years. However, there have been no complaints from any country stating that they are against WTO regulations. While one can say that the floor prices on prime product may be against the W TO rules, there is no such ban as regards seconds and defective products,'' they said.