India Scraps Import duties to Curb Prices

April 29 (Bloomberg) -- India today scrapped import taxes on pig iron and other steel products to bolster domestic supplies and curb inflation, holding near a three-year high.

The country will also levy export taxes on steel products including cold-rolled coils, Finance Minister Palaniappan Chidambaram told lawmakers in parliament today.

The import duty cuts, effective today, will cost the government 15 billion rupees ($371 million), Chidambaram said. Anti-inflation measures announced earlier would have cost the government 48.4 billion rupees, he said.

Wholesale prices rose 7.41 percent in the last week of March from a year earlier, the most since November 2004, according to government data. Price gains eased to 7.33 percent in the week ended April 12.

The export taxes will take effect when the budget proposals get the assent of the president, Chidambaram said.

The following are details of import duty changes:

* Basic customs duty reduced to zero from 5 percent on imports of
pig iron and mild steel products, including sponge iron,
granules, powders, ingots, billets, semi-finished products, hot-
rolled coils, cold-rolled coils, coated coil sheets, bars, rods,
angle shapes, sections and wires.

* Countervailing duty scrapped from the current 14 percent on TMT
bars and structurals, commonly used for construction of houses.

* Basic customs duty scrapped from the current 5 percent on
metallurgical coke, ferrous alloys and zinc, three inputs used
for manufacturing steel.

The following are details of new export duty levies:

* 15 percent export tax on overseas sales of specified primary
forms, semi-finished products, hot-rolled coils and sheets.

* 10 percent export tax on specified roll products, including
cold-rolled coils, pipes and tubes.

* 5 percent export tax on galvanized steel in coil and sheet
form.

Other measures:

* Reduction of import duty on skimmed milk powder to 5 percent
from 15 percent for a tariff rate quota of 10,000 metric tons per
year.

* Reduction of import duty on butter oil, used for milk
production, to 30 percent from 40 percent.

* Imposition of an export tax of 8,000 rupees per ton on overseas
sales of basmati rice.

* Reduction in the minimum export price of basmati to $1,000 per
metric ton from $1,200.