Rallied on one side are the domestic steel producers who have urged the Government, through the Steel Ministry, to put checks on the policy which allows producers of mega power projects to import duty-free steel for their projects. Further, they have also appealed that similar duty-free sops are not extended in sectors like refinery, petro-chemicals, ports, etc.

However, the Power Ministry is not willing to consider any such proposal since domestic supplies often gets delayed and since the mega power project policy is the brainchild of the Power Minister, P R Kumaramangalam, it is not willing to take any chances here. The matter, at this moment is with the Finance Ministry and officials said that till the elections were not over no decision would be taken on the issue.

The Government, in thisyear's Budget, has allowed duty-free import for all equipment to mega power producers. Mega power projects are projects of 1,000 mw and above and will supply power to more than one state.

However, domestic steel producers who are reeling under recessionary conditions, have objected to such a clause stating that this would dampen all their plans of recovery by way of increased demand.

A proposal to this effect has been moved by the Steel Authority of India Ltd (Sail) with the concurrence of other producers like Tisco, Essar, etc. The proposal has mooted that only steel grades which are not indigenously available should be allowed for duty-free import. The proposal has stated that for other steel items which are indigenously manufactured, applicable duty rates be levied so that domestic steel industry can compete on an equal footing.

This move of the Steel manufacturers is going to open a pandora's box since now even the electrical equipment makers are going to raise a similar demand.

The proposal haslisted certain other conditions to put on the policy of mega power projects. For instance, it has stated that all the mega power projects, at least those under the public sector should be required to go in for international competitive bidding to provide equal opportunity to the indigenous steel industry.

The steel manufacturers have also urged that a direct excise exemption may be given to the domestic supplier under deemed export scheme under project import route since the refund of terminal excise duty is time consuming. They have also demanded further concession in railway freight for supply under deemed export.

According to Steel Ministry officials, the current capacity of Indian steel producers stands at 32.6 million tonnes against a demand of nearly 24 million tonnes and therefore, will be able to meet the entire requirement of the power sector. Their argument is that they should not be deprived of a share in the emerging demand.

To the Power Ministry's objections over delays in supply, domesticproducers are ready to abide by any penalty clause which is applicable to any such delays via the import route.