The floor price for hot rolled coils is the second concession granted to the steel industry by the commerce ministry. A fortnight ago, the ministry conceded to an industry plea and lifted the Rs 1,800 a tonne dumping duty on metallurgical coke.

The dumping duty had rendered the essential raw material of sponge iron makers extremely dear. The floor price on hot rolled coils will block imports of the flat steel below the specified price and is expected to bring relief to the domestic industry.

Steel makers at home, who are compelled to peg their prices to the landed cost of steel since the economic reforms brought about a severe slashing of import duties, have been petitioning against unfair competition from abroad for some time now.

Hot rolled coil makers, like the Steel Authorityof India Ltd and Essar Steel, had petitioned for a dumping duty on the material imported from the CIS countries. The petition had been supported by the rest of the home industry, including other hot rolled coil producers like Tata Steel.

The floor price will compel overseas steel makers to pay a duty to the extent to which their hot rolled coils are cheaper than the pre-determined rate of Rs 14,300 a tonne. The country imports roughly five lakh tonne of hot rolled coils and produces close to four million tonne of the product, which goes into the making of automobiles, white goods and other consumer durables.

The floor price seems to be a close substitute of a trigger price mechanism. The centre has been toying with the idea of a trigger price, beyond which steel imports would automatically attract a penal duty, in a bid to stem the inflow of steel at cut-throat prices.

The system, in vogue in some countries like Mexico, did not win favour with the commerce ministry and some segments in the North Block.There is an opinion within the government that the trigger price mechanism was not quite in keeping with the World Trade Organisation (WTO) norms.

A committee headed by special secretary (banking) CM Vasudev, has suggested a reference price (similar to the floor price for hot rolled coils) for blocking imports of steel ``seconds'' and ``defectives'' beyond a price band. The proposal is among a slew of measures suggested by the panel to give a shot in the arm to the recession-hit steel industry.

The steel ministry has proposed using the landed cost of steel from Europe and Japan as a reference rate for steel imports. The floor price for defectives is likely to be a fourth of the reference rate for prime steel.

Steel secretary Ashok Basu told newspersons on Thursday that he expected the Vasudev panel package ``to come through'' soon. The proposals are now pending a nod from the finance ministry.