India May Remove Tax on Steel-Product Exports, Official Says

India’s government may scrap levies on steel-product exports after the companies agreed to lower prices last week to help rein in inflation.

``Inter-ministerial committees are involved but we are trying to expedite a decision,’’ Steel Secretary R.S. Pandey said in a telephone interview from New Delhi today.

India notified the taxes on May 10 on shipments of products including hot-rolled and cold-rolled coil to bolster supplies and help curb the fastest inflation since 2005. The levy was first announced on April 29.

Steelmakers last week agreed to lower prices by as much as 10 percent on the assurance by the government that it would not impose the tax, J. Mehra, chief executive officer at Essar Steel Holdings Ltd., which controls India’s third-biggest steelmaker, said yesterday.

``We are expecting the government to rethink about the tax and scrap it,’’ Mehra said.

India's Rupee Falls to 13-Month Low as Companies Sell Currency

India’s rupee fell to a 13-month low on speculation importers sold the currency to limit losses following its biggest slide since August.

The rupee’s 1 percent decline yesterday added to last week’s 2.3 percent drop, the most in a decade, as near-record energy prices increased demand for dollars needed to buy crude oil. A falling rupee makes imports costlier. The currency also fell as exporters held back sales of dollars earned overseas, expecting to profit from further currency declines.

``The rupee is under pressure as there’s widespread demand for the dollar, from oil companies and all sorts of importers,’’ said Rohan Lasrado, a foreign-exchange dealer at HDFC Bank Ltd. in Mumbai. ``The market is clearly nervous because there’s just no supply of dollars. Exporters are canceling contracts to sell the dollar because they want to wait for better rates.’’

The rupee weakened as much as 0.4 percent to 42.2125 per dollar, the lowest since April 19, 2007, before trading at 42.135 as of 11:21 a.m. in Mumbai, according to data compiled by Bloomberg. The currency, which declined in five of the past six weeks, is Asia’s second-worst performer this year after the South Korean won.

The Indian currency may fall as low as 42.50 in a week amid concern costlier oil is inflating India’s import bill, Lasrado said. Crude oil in New York more than doubled to reach an all- time high of $126.40 a barrel yesterday.

Oil Imports

The value of India’s oil imports rose to a record $8.6 billion in March as the commodity became more expensive, government data show. The nation’s trade deficit widened to a record $25.4 billion in the three months through December, according to the central bank. Asia’s third-largest economy depends on imports to meet three-quarters of its energy needs.

The rupee also fell as the flow of overseas funds into the local equity market declined, HDFC’s Lasrado said. Such inflows helped the rupee rally 12.3 percent in 2007, the most in more than three decades.

Overseas investors sold $2.8 billion more Indian shares than they bought this year, after making record net purchases of $17.2 billion in 2007, according to the Securities and Exchange Board of India.

A government report showed yesterday India’s industrial production expanded at the slowest pace in six years in March, adding to concern overseas investors will scale back stock purchases.

The rupee weakened past 42 a dollar yesterday for the first time since April 2007 after the government said the annual pace of increase in output at factories, utilities and mines more than halved to 3 percent in March from 8.6 percent in the previous month.

``The industrial output report definitely remains at the back of traders’ minds,’’ HDFC’s Lasrado said. ``Especially since the market is receiving no capital flows.’’

Sensex regains 17K level; IT leads

The Bombay Stock Exchange benchmark Sensex on Tuesday regained the 17K level by rising over 170 points in early trade on buying by funds in heavy-weight stocks, tracking firm global Markets.

The 30-share index shot up by 170.18 points to 17,031.08 in the first five minutes of trade. It had gained 123.83 points on Monday.

Similarly, the National Stock Exchange index Nifty surged by 46.15 points to quote higher at 5,058.80.

Marketmen said a firming trend in the global Markets mainly boosted the trading sentiments.

The major gainers which supported the Sensex were Reliance Industries, Reliance Petroleum, Reliance Communications, Reliance Energy, ACC, Larsen and Toubro, BHEL, State Bank of India, HDFC Bank, ICICI Bank and Grasim Industries.

Among technology stocks, Infosys Technologies, Satyam Computers, TCS and Wipro were also in positive zone with gains on funds buying.

Rupee stays at 1-yr low; stocks eyed

Rupee was mostly steady at one-year lows on Tuesday as investors wait for the stock market opening to determine whether foreign investors are still keen to invest after weak factory data a day earlier.

At 9:20 am, the partially convertible rupee was at 42.06/42.07 per dollar, barely moved from Monday’s close of 42.05/06.

Oil prices eased on Tuesday as some investors saw a recent rally to record highs as excessive, while Asian shares gained as banks were bolstered by further signals the worst of the credit crisis may now be over.

Industrial output grew 3.0 per cent in March from a year earlier, its weakest growth in six years as high interest rates squeezed demand for consumer goods.

The stock market has fallen almost 17 per cent in 2008 due to foreign fund selling of more than $2.9 billion.

Capital inflows are a key driver for the local unit. The rupee has lost 6.3 per cent against the dollar so far in 2008 to be Asia’s weakest currency behind the Korean won.

The rupee rose more than 12 per cent in 2007.