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After cement, it may be the turn of steel. The Cabinet Committee on Prices, which is meeting next week to take stock of the price situation, may ban exports of steel and steel products.
The other measures being considered include levying an ad-valorem duty on iron ore exports and bringing down the excise duty on steel to 8 per cent from the current level of 14 per cent.
But the Indian Steel Alliance on Saturday appealed to Prime Minister Manmohan Singh to take into account the negative consequences of banning exports of cement and steel.
The total percentage of exports of steel at the moment is not more than 6-8 per cent of total production. A total ban on steel exports therefore may not produce the desired results, ISA President Moosa Raza said.
Commerce Minister Kamal Nath told reporters on the sidelines of a seminar organised by the Confederation of Indian Industry that the steel ministry is considering many steps to bring down prices in the sector. The message is clear: the government is ready to take whatever steps required to control prices, Nath said.
Nath also added the Cabinet Committee on Prices will meet next week to take stock of the price situation. The Wholesale Price Index-based inflation rose to a three-and-a-half-year high of 7.41 per cent for the week ended March 29.
Meanwhile, the Commerce Ministry, which announced a slew of measures to ease export procedures in the foreign trade policy, expects that in coming months export-import procedures will get further relaxed.
"The Electronic Data Interface System is being revamped at a cost of Rs 870 crore (Rs 8.7 billion). New hardware and software will be in place by June this year and testing will begin by September. The current EDI system is not capable of handling the large amount of data, which leads to a lot of delays," Commerce Secretary Gopal K. Pillai said.
Pillai also assured the industry that reimbursement of service tax on foreign agents used by exporters will be further increased.
"The department of revenue has asked for some additional details on service tax paid by exporters on services rendered by foreign agents. Once that data is available, the revenue department will further increase the reimbursement of service tax on foreign agents," Pillai added that a joint task force, which was announced by Nath on Friday, will be set up within the next 30 days.
"We expect the recommendations to come in after six months thereafter. There will be many other sub-JTFs looking at specific issues on the ground. Issues which can be sorted out will be sent to Commerce Ministry, which will then approach the Union Cabinet," he said.
Bar on cement exports futile exercise
The government has notified a ban on cement exports, which comes into effect from Friday. This is the latest on a series of steps the government has taken to cool rising commodity prices in the country.
But experts said the ban would not have much of an effect on domestic prices as cement exports account for a very small part of the country's production.
"Exports of cement constitute only 3 per cent of production and 90 per cent of the exports are from companies located around the Gujarat coastal area. Most of these companies are small and mainly export to South Africa and Sri Lanka, as is obvious from their location and country focus. Therefore, the steps taken by the government on banning cement exports would not be effective to contain the price rise," a Confederation of Indian Industry release said.
CII called on the government to consider reducing the excise duty on cement, a move that it said would help in controlling prices. The export ban comes after cement companies increased prices of the commodity by Rs 5 per 50 kg bag earlier this month.
In the period between April 2007 and February 2008, cement exports stood at 3.33 million tonnes, down 38.78 per cent over the corresponding period of 2006-07 on account of higher price realisation in the domestic market.
Meanwhile, Commerce Minister Kamal Nath on Saturday clarified that the ban would not be effective on deemed exports made to EoUs and SEZs. "We will issue a corrigendum in this regard," Nath said.
