Indian consumers uneasy with the artificial rise of steel prices

Indian consumers uneasy with the artificial rise of steel prices

According to market reports from India, Apex Chamber of Commerce and Industry (Punjab) today alleged that the raw material prices are kept at very high levels with the manipulation of steel producers. For this reason the Chamber of Commerce asked the government for duty cuts to provide relief to consumers. The shortage of iron ore in India is believed to be rather artifical. It is defended that the import duties reduced for special steel products used by car makers and other large industries should also be covering small and medium industries in order to avoid them suffer these aforementioned artificial price increases. Currently the domestic steel demand is surpassing the production levels in the country and the producers are therefore obliged to import to cover the balance. According to Apex, steel producers are exporting steel at 20% discount to global prices which creates losses. Such losses are to be compensated by incentives provided by the government. It is claimed that if the exported tonnages under the governmental incentives were sold into the country instead, Indian government could have made an earning of 16% excise duty, saving a Ruppes 4'000 crore. False statements are given by the steel producers to the government with regard to the increasing production costs according to the belief by Apex, although these companies do possess iron ore reserves enough for production. This artifical shortage coul easily be overcome by removing export subsidies and giving relief of customs duty on pig iron and steel by 5%, according to the Apex president. It appears that the institution is uncomfortable about the government's strong support to the steel producers to handle their rising production costs, while taking it slow to make it easier for the consumers to obtain imported material.