Centre decides to sell stake in SAIL

The government on Thursday decided to slap 21 per cent duty on import of power equipment and sell 10.82 per cent of its stake in the Steel Authority of India (SAIL), which may fetch the exchequer over Rs 4,000 crore.

The Union Cabinet also approved demerger of surplus Videsh Sanchar Nigam Limited (VSNL) land into a separate company, an issue that has been pending decision since Tata Communications acquired the PSU in 2002.

The land is estimated to fetch Rs 6,150 crore to the exchequer. The Cabinet, however, deferred approval to the Forward Contract Regulation Act (Amendment) Bill, which was opposed by the Trinamool Congress in the last Cabinet meeting.

The decision on slapping duty on power equipment import is aimed at protecting domestic companies from cheap Chinese shipments. “Cabinet has approved levying 21 per cent import duty on power equipment sourced from overseas,” sources said.

The Cabinet has approved 5 per cent basic customs duty, 12 per cent counter-veiling duty and 4 per cent special additional duty on import of power gear.

Earlier this month, the Power Ministry had floated a proposal seeking higher duty on import of equipment for the power sector. The ministry had proposed five per cent basic custom duty, 10 per cent counter-veiling duty and four per cent special additional duty. Besides, with the recent two per cent hike in excise duty, the overall import duty will be 21 per cent.

At present, equipment imported for projects of less than 1,000 MW capacity attract five per cent customs duty, while those above that enjoy exemption.

As regards SAIL, the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Manmohan Singh, cleared the SAIL public offer.

The share sale process, proposed to be conducted through auction route or offer for sale, is expected to fetch over Rs 4,000 crore to the government.

The Disinvestment Department will decide on the timing of the issue depending upon market conditions. The government currently holds 85.82 per cent stake in SAIL. Shares of SAIL closed at Rs 93.10, down by 0.16 per cent as against the previous close.

Regarding the FRCA Bill, sources said it was essential for the development of commodities futures market as it aims to strengthen the regulator FMC by providing financial autonomy, facilitate the entry of institutional investors and introduce new products for trading such as options and indices.