"It is expected that this price reduction by Tata Steel will, in turn, contribute in arresting or moderating the pressures on price increases by major users on their products," company chairman Ratan N Tata said in a statement.

Tata Steel worked on prices that were generally steady through the year for direct customers as it sold through long-term contracts.

"These prevailing prices have remained below those of its major competitors," the statement said."However, there is need to do even more," Tata's statement added.

Hoping that other steel manufacturers and members of the steel trade would also display a sense of corporate responsibility by rolling back their prices in the interest of curbing inflationary trends, Tata identified inflation as a scourge of the economy. However, competitors wary of Tata Steel refused to bite the bait.

Only Ispat Industries came out in support, admitting there was a case for a reduction in prices in the domestic market to control inflation. A review of its pricing structure will take place soon.

Sources in the government-owned Steel Authority of India Ltd said it would review prices on Monday. Others pointed out that manufacturers without a raw material base had little leeway to reduce prices. Essar Industries refused to comment on the development.

Trade sources said they would have to clarify if the price reduction would apply to buyers who bought steel for downstream production and exports, and were not players in the domestic price arena.

"It is at times such as this that Indian industry must stand together, display moderation and desist from making exploitative profits, in order to arrest the scourge of inflation which could negatively impact the current growth rate of the Indian economy," he stated.

The Indian steel industry turned to the government when threatened by external factors, seeking protection through duties, imposts and even blocking entry from global sources.

At present, rising inflation is a concern. The economy experienced a turnaround last year, after three years of economic downturn. But the recent upward spiral of prices threatened to dampen the demand for goods.

"Responsible corporates need to exercise moderation at all levels in an endeavour to hold the price line. Failure to do this could conceivably push the economy into another demand downturn," Tata pointed out.

Global steel prices have been firm, with major producers like Posco raising prices. Hot-rolled products were selling in Europe and the United States at $600 per tonne, while China was buying at negotiated prices.

Tata said rising prices had converted the steel industry from a "sunset" industry to one attracting investment in capacity creation, with price increases driven mainly by demand from China's infrastructure and construction sectors. Some input costs had also risen.

Indian steel prices had risen in response, but this had had a cascading effect on the prices of most domestic manufactured products in the engineering, consumer durables and automobile segments, Tata admitted.