Softening of international steel prices may result in domestic prices coming down as well. Jamshed J Irani, chairman of Indian Steel Alliance (ISA), an association of top five flat steel manufacturers, said there was already softening of steel prices in the US and China and prices in domestic market too were expected to drop or at least stabilise at the current levels. A working group has been formed between the steel manufacturers and consumer industry, which meets on a regular basis to chalk out the pricing issue.

Mr Irani said market dynamics (demand and supply) should determine the prices and in case of oversupply, the prices might come down. There should not be any government interference in the determination of steel prices, he added. ISA has urged the government to make available quality raw material, resumption of duty entitlement pass book (DEPB) scheme on steel exports and maintaining the import duty level at 15 per cent.

In a presentation made to steel minister, Ram Vilas Paswan on Tuesday, ISA has stressed the need to implement these steps to ensure the viability of the Indian steel industry. Mr Irani said, "The steel sector has just emerged from a bad cycle and is beginning to get back on its feet. We must take necessary steps to ensure that the industry continues to remain healthy in the long run."

ISA has said that the availability and prices of raw materials is a major concern for the Indian industry. Policies that contribute to development of raw material resources within the country should be initiated. The association has said that relief needs to be provided on import of raw materials, which are not indigenously available / inadequately available. ISA has also emphasised the need to strengthen the infrastructure such as roads, ports and rail links to make the sector more competitive.

ISA president, Moosa Raza said the government must use its negotiating strategy and try to work out a barter deal with China which needs iron ore to get metcoke. Referring to the low profitability levels existing in the domestic steel industry, Mr Irani said the government must create conditions so that the returns in the sector were equivalent to other industries like power. "The country may turn into a net importer by 2007-08, if the current demand continues and no effort is made towards capacity addition in the next few years," he added.