Recently the government has reduced the import and excise duty on steel and related products to control the rising prices, which is possible in the short run. However, in the long run the steel prices are bound to increase.

In February 2004, the Government of India decided to cut the excise duty on steel from 16 to 8% and import duty on basic raw materials used in steel production to 5% (except on coke, which has been exempted from import duty). Seemingly, the move was a response to resolve the tussle between the steel end-users and the steel manufacturers. The tussle was on account of the rising steel prices, which, the user groups claimed was the willful action of the steel manufacturers to fill their coffers. However, the steel manufacturers, represented by the Indian Steel Alliance (ISA), claimed that the rise in steel prices was the outcome of the rising steel input costs.

Steel being the primary input for many industries like construction, automobile and infrastructure, a further rise in its price would block the growth of these industries and in turn tarnish the `shining' India. To avoid these adverse circumstances, the government has bestowed the steel industry and the user groups with a bunch of sops, which would cost the government Rs. 6,000 cr per annum and would result in reduction of steel prices by around Rs. 1,500 to 2,000 a tonne.

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