What has augmented the industry’s anxiety is that certain types of steel products have no domestic takers and if exports were disincentivised, it would only add to their inventory. As a precursor to imposition of the duty, the government withdrew the Duty Entitlement Pass Book (DEPB) scheme, which is bound to deplete their coffers by about Rs 600 crore.

The Federation of Indian Chambers of Commerce and Industry (Ficci) said that the export duty would affect prospective investments worth Rs 1 lakh crore. In a representation to finance minister P Chidambaram, it said that the government’s decision would not only affect revenues of steel companies, but also their prospective investment plans.

It noted that performance of the steel sector has shown signs of a slowdown, with production of finished steel growing by a meagre 5.1 per cent in April-March 2007-08 compared with a 13.1 per cent increase in the previous fiscal. Ficci observed that the Reserve Bank of India (RBI), in its survey, found that the gross profit margin ratios of 105 iron and steel companies declined in the first quarter of this fiscal vis-a-vis the first quarter of the last financial year.

•Flat products are used to make auto grade steel & consumer durables

•Export duty has hit steel co profits in wake of sharp raw material price rise

•Some steel products have no domestic takers; exports curbs only add to their inventories

•Steel Ministry also wants 15% ad valorem duty on iron ore exports