CHAIRMAN's DESK

" ...The Union Budget for 2004-05 has continued with the basic philosophy of reducing import tariffs so as to bring them in line with the WTO levels by 2006..."

The Union Budget for 2004-05 has continued with the basic philosophy of reducing import tariffs so as to bring them in line with the WTO levels by 2006. Import duties have been reduced across the board by 5 per cent and this should definitely be welcomed by the steel consuming industry, which has been extremely concerned with the rise in prices. Reduction in duties should help to keep a check on prices though the simultaneous increase in excise duty from 8 per cent to 12 per cent is likely to have the opposite effect. The Ministry of Finance must have decided to raise excise duties since their past experience shows that even when excise duty was reduced, the benefit was not passed on to the consumers.

In other words, the Government's philosophy of nurturing the industry is quite clear. Apparently, the government feels that adequate time has been given to the industry to adjust itself to the forces of competition. The fact that our producers are among the lowest cost producers in the world has further strengthened the Government's resolve to accelerate the process of bringing our tariff level to international standards. While this is a laudable objective per se, the fact remains that the status of our physical infrastructure as well as systemic infrastructure leaves much to be desired. There are still significant gaps in infrastructure availability, which adversely affects the competitiveness of our steel plants, and, therefore, this is an area, which will need greater attention on an accelerated basis if we are to reach world standards by 2006.

The Ministry of Steel has captured all these concerns in the draft national steel policy, which is presently under finalisation and we hope that the final policy will be made public in due course of time.

( J P Singh Joint Secretary, Ministry of Steel & Chairman, JPC)
(This is excerpted from JPC Bulletin June' 04)