CII seeks core sector status for steel industry

NEW DELHI: Industry body CII on Tuesday sought special dispensation from the government in the form of infrastructure status and higher banking exposure norms for the steel sector. In a paper submitted to the government, CII has also sought that the steel sector should be accorded tax incentives at par with special economic zones to enable it to attain global scale.

“The government should consider steel industry as a priority industry and provide appropriate fiscal incentives which are provided to other priority sector industries,” CII said in its paper. It also sought higher sectoral exposure limits for banks and financial institutions from the present levels. Seeking infrastructure status for the sector, CII said there was no justification why steel should not get benefits as is being accorded to the power sector.

In its paper, CII has also suggested setting up a special purpose vehicle — Steel Finance Corporation of India (SFCI) — as a public-private partnership entity for the sector. It suggested that integrated steel plants with a capacity of minimum two million tonnes be allowed to determine their own rate of depreciation while duty on project imports for greenfield and brownfield expansions for steel projects be brought down to zero in the next 15 years.

The chamber sought relaxation on restrictions for end use of external commercial borrowings (ECB) for steel firms to enable them retire rupee debt and raise project finance. “Interest limit on raising ECBs may be relaxed to at least LIBOR plus 5.5 on floating rate from the current rate of LIBOR 5.5 per annum,” CII has suggested the government.

The industry body also demanded that securitisation of export receivable be made free from all restrictions. “Main EPC contractor for setting up steel plant should get benefits available to a developer as provided in the SEZ Act,” the industry body demanded.