DEPB rates on steel exports restored partially

MUMBAI: In a move that could help steel exports, the government has restored DEPB (Duty Entitlement Pass Book) rates to previous levels in some categories, while increasing the rates in the case of hot rolled steel coils.
The Commerce Ministry had reduced the DEPB rates in the Exim Policy announced in April this year.
DEPB rates for hot rolled coils, the base grade steel product from which all other value-added grades are made, have been increased to 15 per cent from 12 per cent. This is the only area where the government has exceeded the pre-April rate as the DEPB rate then was at 13 per cent.
The move also restores the DEPB rate for cold rolled steel to 17 per cent from 15 per cent, while in galvanised steel it is now at 18 per cent from 14 per cent.
The purpose of the DEPB scheme is to neutralise incidence of various duties levied in the inputs used in making steel. This is done through reimbursement of duty, which is calculated on the basis of standard input-output norms. The duty credit also considers the extent of value addition in exports.
Galvanised steel, which now forms the mainstay of Indian steel exports, will stand to benefit the most.
At an average FoB of $475, the gains that galvanised steel companies like Jindal Iron and Steel Company (Jisco), Tata Steel and Ispat Industries would get is $15 to $18 per tonne. Jisco exports on an average 35,000 tonnes every month.
In the case of hot rolled steel companies, the gain is Rs 250 to Rs 350 per tonne, while cold rolled steel companies would get Rs 350 per tonne.
Welcoming the government’s move, industry sources said that while it would help exports, “it should be seen more as a correction. The DEPB rates had been reduced before and hence the current move is a correction,� an official said.
The Commerce Ministry had earlier decided to restore the DEPB rate for stainless steel to 12 per cent, from 10 per cent.