In a proposal forwarded to the Directorate General of Foreign Trade (DGFT), the ministry has also recommended reduction in floor price of HR sheets to $ 288 from $ 317 (Cost-Insurance Freight) (CIF) per tonne, the sources said on conditions of anonymity.

The new prices are likely to be notified by the DGFT, an arm of the commerce ministry, after studying the proposals, sources said. The steel ministry had forwarded two proposals for revising the controversial floor price in February 1999. One proposal suggested that imports of HR coils could be allowed at any price contracted by the importer while maintaining the value of HR coils as $ 302 per tonne for purposes of calculating customs duty. This way the HR coil prices would have also gone up correspondingly while resulting inincreased revenue mobilisation, the sources explained.

The other proposal had detailed reducing the prices on steel products covered by the floor price. The DGFT had asked the steel ministry to make up its mind on its own on what proposal they favoured and the steel ministry had settled for the second option that was forwarded yesterday, the sources said.

The steel ministry has also recommended slashing of cold rolled (CR) coil floor prices to $ 374 per tonne from $ 392. Sources said the new floor prices were arrived at by calculating the average of international prices for the six months period beginning July 1998.

Earlier, the steel ministry had taken up the average of prices ruling in London Metal Exchange (LME) for the three month period between April-June 1998 before fixing up the floor price.

The ministry has said the floor price of tinplates could be set $ 63 below the floor price of $ 720 per tonne notified on December 11, 1998. Similarly, it has recommended reduction in prices of electricalsheets (CRNO) to $ 654 from $ 763 and alloy steel bars and rods (HR in coils) to $ 704 from $ 740.

However, a raise in floor price of plates (72.11-as per ITC HS code) has been recommended. As per the proposal, the prices would go up by $ 10 per tonne from 409 dollars. Even after revision of the floor price, the prices of HR coils would be $ 28 higher than the anti-dumping price of $ 245 imposed on imports from Russia and Ukraine.

The floor prices, unlike anti-dumping duty, was against imports from all countries, the sources said. But they conceded that even the reduced prices would not stand the scrutiny of WTO rules. The domestic HR coil producers had demanded retaining the floor prices at the existing level for protecting the interests of indigenous industry. They argued that major manufacturers like SAIL and Tisco had suffered heavy losses in last two years on account of cheap imports from other countries.

SAIL was hit by a loss of Rs 890 crore for the first nine months of 1998-99. Tisco, whichposted a reduced profit, said though the quantity of HR coil imports as a percentage of domestic capacity was not very large, the cheap imports forced the domestic industry to sell at prices lower than the viable price.

The commerce ministry, on the other hand, had asked the steel ministry to take a considered view on the whole issue of fixing floor prices as higher HR coil prices meant that it would adversely affect CR coil manufacturers, who are also part of the steel industry.