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Steel industry hits back at proposal for regulator

business Updated: Mar 20, 2008 22:55 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
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An enraged steel industry has hit back at the proposal of setting up a regulator stating that it would be a regressive initiative causing serious damage to the sector’s growth.

In a letter to Prime Minister Manmohan Singh, the Indian Steel Alliance( ISA), an influential industry association, said a regulator for the sector would “put the manufacturers between two prongs of a pincer”.

“While steel manufacturers shared the government’s concern about current price situation… any attempt to regulate market forces operating on steel prices disregarding root causes is a retrograde step and will adversely affect growth of the industry,” Indian Steel Alliance (ISA) president Moosa Raza said in the letter to the Prime Minister. Raza’s letter comes barely 24-hours after Steel Minister Ram Vilas

Paswan mooted the idea of a regulator and argued in favour of withdrawing export incentives for the steel sector.

In a letter to Singh, Paswan has asked Prime Minister Manmohan Singh to withdraw export incentives available to steel producers.

Paswan said rise in steel prices has abnormally increased between 20-24 per cent. He also revived the idea of creating a regulator and said as a short-term measure, the government could consider withdrawal of duty entitlement passbook scheme (DEPB).

In response, Indian Steel Alliance president Raza said the input costs have gone up substantially and pointed out that spot prices of iron ore have increased to $150 per tonne from $50 a tonne. “Even the state-owned NMDC has raised contract prices by 50 per cent in the middle of last year. Coke from China has hit the ceiling with a price of $ 523,” Raza said.

“In the light of this, any talk of regulating prices would tantamount to putting the steel manufacturers between two prongs of a pincer… Price regulation will only benefit intermediaries and would only encourage corruption,” he said. Raza said the solution for price increase is to encourage the development of additional capacity and this requires iron ore security.

“This can be done only by allotment of dedicated iron ore mines to the existing and upcoming entrepreneurs and by speedily removing bottlenecks in the infrastructure and regulatory areas,” he said.