Though the World Trade Organisation (WTO) had prescribed lowering of duty on steel to around 35 per cent, the United Front government brought it down to a low 28 per cent putting the domestic steel industry in jeopardy, sources said adding the government proposed to reverse it to the 35 per cent level to provide tariff protection to domestic industry.

The sources did not quantify the exact increase in tariff but only said it would be ``broadly around 10 per cent''. On commercial vehicles, sources said the depreciation rate would be doubled from the present 20 per cent to 40 per cent to stimulate demand. That apart, if a new commercial vehicle is bought after scrapping an old vehicle, then the depreciation rate would be 60 per cent.

In a last minute change, a proposal to cut excise duty was dropped in order to ensure that themeasures are fiscally neutral as far as possible. The sops are contained in an incentive plan submitted by the working group on commercial vehicles formed by Yashwant Sinha 10 days ago to suggest short and medium term solutions to boost demand and clear hurdles. The minister has had several meetings on the suggestions and a decision on them is likely within the next week.

In all, five working groups had been formed - relating to steel, cement, capital goods, textiles and commercial vehicles - all of which were given a 10-day deadline to work out incentive packages. The reports have been submitted and a series of announcements are scheduled in the coming days.

The group has suggested that state road transport corporations (SRTCs) and central departments like defence and home should place orders for their requirements - of the order of 10,000 to 15,000 vehicles - for the current year by December, 1998. For the next year, the recommendation is that orders be brought forward and made known by March 31,1999.

Another suggestion is that the director general of supplies and disposals should come out immediately with a new rate contract for CVs. The last rate contract expired in July, 1998 and has not been renewed yet.

The group has asked the CV industry to provide a blueprint to boost exports within four weeks so that necessary action taken on it.

One of the controversial measures which has been recommended for adoption by the government over a larger time frame concerns opening of escrow account mechanisms for SRTCs, specific to roads or geographical segments which are profitable. The escrow cover can then be leveraged to garner much needed funds from lenders.

Changes have been suggested in section 59 of the Motor Vehicles Act which allows the government to determine the age of vehicle at which it can declared as condemned. An inter-ministerial committee should make appropriate changes keeping in mind environment concerns and technological advances.

A crucial recommendation is to allow theInfrastructure Development Finance Corporation (IDFC) to make available funds at its disposal for the road transport sector. The committee, however, did not recommend how and to whom such funds should be loaned. Another suggestion is to follow the example of Tamil Nadu State Financing Corporation which has evolved an innovative CV financing model.