Steel Procurement by Micro, Small and Medium Enterprises members of EEPC) under Foreign Trade Policy
As per the discussionbetween Ministry of Commerce & Ministry of Steel with Engineering Exports Promotion Council (EEPC) and with 6 steel producers namely SAIL, RINL, TATA Steel Ltd, JSW, JSPL and AMNS (herein after referred to as ‘Steel Producers’) an office memorandum was released1wherein it was agreed between EEPC and Steel Producers that Steel Producers will supply steel to MSME members of EEPC at export parity price and such supply will be treated as deemed export. The supply of steel by steel producers as stated above would also cover supply through their service centers/ distributors/ dealers/ stockyard.Accordingly,amendments have been made both in the Foreign Trade policy and Procedures to extend such benefit of deemed exports to such producers along with their units.The broad features of the scheme is stated herein below:
EEPC and Steel Producers have agreed on the following procedure
- Initially four main products will be supplied by the Steel Producers viz. Hot Rolled Coil (HRC), Cold Rolled Coils (CRC), Wire Rods & Alloy Bars in a ratio of 40%, 20%, 20% and 20% respectively with a provision for adding other products such as Billets, Pig Iron etc. in future.
- Total quantity commitment from the Steel Producers shall have a maximum limit of 10 lakh Ton per year (irrespective of number of products) with average monthly allocation of 85 thousand ton.
- Steel supply by each EEPC member will be worked out on mutual understanding and most expectedly the same would be calculated based in ratio of each producer in the total sales of these industries during the previous year.
- EEPC will monitor the compliance of this arrangement in respect of deemed export supplies under Advance Authorisation, proportionate ordering, consumption of steel procured by MSME members and export of the final products.Such engineering products cannot be sold domestically.
- Steel Producers can directly supply steel to EEPC members from their plant as well as from their service centers/distributors/dealers/stockyard.
Export Obligation and Benefits to EEPC Members
EEPC members while booking the orders with Steel Producers, shall obtain an Advance Release Order (ARO) in favour of the steel company. MEIS benefit shall be claimed by the EEPC members but the MEIS amount on applicable FOB value shall be added in the basic price of steel.
Amendment in FTP and HBP
The FTP has also extended the benefit of Duty Drawback2to even Steel Producers who are supplying steel against Advance Authorization through their service centers/distributors/dealers/stockyard, provided such supplies are made in accordance with Ministry of Steel office memorandum1 . Moreover, Steel Producers shall have to raise invoice against Advance Authorisation holder and such supplies can be made through service centers/distributors/dealers/stockyard who will also raise an invoice to steel producers bearing a cross reference for such supplies.
In furtherance to above, subsequent changes have been made in Handbook of procedures3wherein for AROs issued for domestic procurement of steel at export parity price details of service centers/distributors /dealers /stockyard of steel producers from where the steel is being produced is mentioned along with countersigning by EEPC.
The aforesaid change has been bought with the perspective of boosting make in India concept and promoting exports. The benefit of duty drawback scheme has been extended not only to 6 steel producers as illustrated above but also to their service centers/distributors/ dealers/ stockyard from where the supply of steel is made.
- O.M No. S-21016/3/2020-TRADE-TAX-Part (1) dated 27.05.20 read with OM dated 24.06.2020
- Notification No.35/2015-2020 dated 01.10.20
- Public Notice No. 23/2015-2020 dated 01.10.20