Domestic steel industry has been going through challenging times with raw material prices rising unabated and government trying to cap final product (steel) prices in order to keep inflation under check. Notably, the government has taken several measures in the past six months to keep a check on steel prices, which contribute around 3.63% of WPI. Now, after holding prices for three months the battle between the government and steel players has erupted again. With the anticipation of players increasing prices very soon, government is trying to counter this with the imposition of a price band on steel products. Imposition of price band may unfairly treat the domestic steel industry as global steel prices are ruling at 30% premium to domestic prices. Global prices have increased by 50%-60% in 2008 as compared to just 20% rise in the domestic market.
There has been a decline in rate of inflation on in recent months in India.