India safeguarding domestic steel industry

With excess capacity in the country, government is checking imports

By Author  |  Published: 14th May 2017  10:55 am
steel plants in AP, Telangana

Hyderabad: The Finance Ministry has recently imposed anti-dumping duty ranging from $478 to $ 489 per tonne on hot rolled alloy and non-alloy coils and $561 per metric tonne on hot rolled plates when imported from China PR, Japan, Russia, Indonesia, Brazil and South Korea in a bid to curtail imports and protect the domestic steel industry.

Nikunj Turakhia, president of Steel Users Federation of India (SUFI) told Telangana Today, “The Indian steel industry will be benefited by the government’s move, which has come in due time and is in line with the recommendations made after the detailed examination and report by Directorate General of Anti-Dumping and Allied Duties (DGAD) on April 10, 2017. The protection for five years will certainly offer long term benefits to Indian steel mills, as the domestic producers will be guarded against cheap imports.”

Although DGAD had given its recommendation a month back and the Finance ministry notified definitive anti-dumping duty on May 11 and applicable from the date of imposition of provisional anti-dumping duty being August 8, 2016.

“India is contending to take over the second position from Japan by next year, as the largest steel producer in the world, and such measures will have positive impact on restricting imports and increasing domestic production. The anti-dumping regime is World Trade Organization compliant and supports the New Steel Policy 2017.” Turakhia added.

Anti-dumping is a long-term protection measure for Indian companies and is WTO compliant unlike the government’s minimum import price mechanism which gives only annual protection.
Impact on nations

The anti-dumping regime is welcomed by the Indian steel industry despite some strong opposition from other countries. Japan has made aggressive representations against India’s anti-dumping duty plans in the past, by contending that when India and Japan have free trade agreement why impose duties on its supplies. South Korea too which has free trade agreement with India will be impacted by the anti-dumping duty decision, but the nation is yet to make any formal appeal against it. China is the largest exporter of steel raw material to India.
Domestic capacity

Explaining the capacity status, he said, “India has surplus capacity. And we don’t have to import any of these raw materials. Our exports went up by 102 per cent last year. When we are strengthening ourselves as an exporter, we need not import from other countries. But the domestic companies should be more rational in their pricing else suppliers from other countries will target the Indian market. Though imports had been declining year-on-year, some rationalisation needs to happen. Imports have come down to about 37 per cent from around 60 per cent in the previous years.”

India has been exporting hot rolled coils to Vietnam and Europe. Many of the countries have imposed anti-dumping duty on China. This has resulted in demand for Indian steel raw material.
But since the Indian steel raw material is bit expensive, Indian finished steel makers are importing from other markets, Turakhia pointed.
Ideal duty structure

Though imposing duties on raw material imported from other countries that are dumping in India is a move that will benefit Indian industry, the country should shift towards an inverted duty structure, wherein duty levied on raw material should be less, intermediates should be medium and the finished goods should attract the highest duty.

Only this will benefit the Indian industry.“We have made representations recommending such duty structure to both Steel and Commerce ministries. I opine since the steel industry is reeling under high debt, the government is trying to focus on addressing this issue first and later it may resolve the duty related issues,” he said.