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In one of the biggest mergers among industry associations, six associations representing over 2,000 steel companies have agreed to come together to lobby jointly with the government and hot rolled coil producers, especially on issues relating to price and availability of steel and iron ore.
The associations have decided to formally announce the formation of the new Confederation of Indian Steel Producers early next month, a senior official at one of the associations said.
These associations are Cold Rolled Steel Manufacturers Association of India, All India Rerollers Association, All India Induction Furnace Association, Steel Rolling Mills Association of India, Sponge Iron Manufacturers Association and Ship Breakers Association of India.
"We have decided to formalise the formation of the confederation on July 5. By then, we expect the members of all the associations to submit their assent letters. After this, we will constitute a governing body," the official said.
The new alliance plans to jointly represent their views to the government on policy matters. "The main issue would be to get due recognition from the government as the secondary steel producers constitute over 50 per cent of the total finished steel production in the country. But, we are not even allowed to become members of the Joint Plant Committee," the official said.
As per available data, the production of finished steel grew by 7.5 per cent to 36.18 million tonnes during 2003-04. Of this, 21 MT came from the secondary producers while the main producers accounted for 15.18 MT.
The confederation would also urge the government to frame policies after considering the needs of small producers like iron ore requirements and customs duties, the official said.
He said the small steel companies were forced to buy iron ore from private companies at twice the cost of National Mineral Development Corporation unlike the big steel producers.
The reduction in the customs duty on steel from 25 per cent to 15 per cent and that of excise duty by half to 8 per cent also did not lead to any decline in prices of the five major hot rolled coil producers, Steel Authority of India, Tata Iron and Steel Company, Jindal Vijaynagar Steel Ltd, Essar Steel and Ispat Industries, the official said.
Even the freeze on duty entitlement passbook scheme did not help to improve domestic availability of steel. According to him, the freeze on DEPB should continue, as there was a shortage of steel in the country.
The alliance is likely to recommend a three-tier duty structure. While the present 15 per cent customs duty on raw materials like sponge iron, pig iron and melting scrap should be abolished, in the case of intermediate products like hot rolled coils and billets, the duty should be brought down to 5 per cent from 15 per cent at present. For finished products, the duty should be maintained at 15 per cent.