The association's chairman and Jindal Steel and Power managing director Naveen Jindal, said the difference in the import duty on coking coal and non-coking coal was an anomaly that deeply hurt sponge iron makers. Coking coal (with less than 12 per cent ash) attracts five 33 per cent import duty.

Coking coal is an input for steel making through the blast furnace route. Non-coking coal is a vital input for sponge iron makers and so for steel-making through the electric arc furnace or induction furnace route. The customs duty on non-coking coal (also with less than 12 per cent ash), was increased to 15 per cent in the last Budget.

Jindal said the higher customs duty was contrary to the recommendations of the Chelliah committee, which had suggested that theimport duty on raw materials be kept low. He also called for a reduction in the 16 per cent excise duty ad valorem on steel, during the formal inauguration of the meeting on Monday morning. The demand for duty concessions follows a bad year for the sponge iron industry, during which both domestic and export prices of the material crashed because of a dwindling demand. Sponge manufacturers had to cut-back production by 2.9 per cent, primarily because of a drop in exports from the three gas-based sponge iron units of Essar, Ispat and Vikram Ispat of the Aditya Birla group.

The three gas-based plants make 3.6 million tonne of sponge iron, while the remaining 20 coal-based plants manufacture 2.4 million tonne of the material. Sponge iron production fell to 5.24 million tonne last year.

Sponge iron makers say they were hit by a decline in price realisations in the home market and abroad, along with the galloping cost of inputs. The slow, but definite growth in the demand for steel used in construction (made byelectric arc furnaces and induction furnaces) augurs well for sponge iron makers.

Jindal felt that with a little help from the government, the country could now emerge as the largest producer of sponge iron. India is today the second largest producer of the steel-making input, after Venezuela.