Convinced that the sudden surge in steel imports in recent years has inflicted injury to the domestic manufactures of the alloy, the Directorate General (DG) of Safeguards attached to the finance ministry has recommended a provisional 20% safeguard duty for a period of 200 days on the common variety of hot rolled coil.
Domestic primary steelmakers welcomed the move and expressed the hope that the duty would be imposed soon.
An official release said the DG’s recommendations would be examined by the Board of Safeguards, headed by the commerce secretary. The finance ministry would issue the relevant notification if the Board endorses the DG’s view. A safeguard duty, a legitimate tool with governments to protect domestic industries, if imposed, will apply to imports from all countries.
The move comes at a time when among major steel companies, SAIL, JSW and JSPL posted net losses in Q1 of FY16, while Essar Steel and Tata Steel saw lower net profits partly due to cheaper steel imports by user industries. While the DG has noticed imports increasing from 5% of domestic production in 2013-14 to a likely (annualised)13% in 2015-16, as FE reported earlier, there is no unanimity within the government on whether steel imports have really been harmful to the economy. The commerce department notes that if imports of iron and steel may have surged but so have their exports and argues that net imports of these items haven’t been high enough to cause alarm. Also, there are economy-wide benefits of cheaper steel availability as it could cut costs of infrastructure projects which the country is focusing on, and spur exports of value-added items.
The DG-Safeguards said: “…I find that there is a direct co-relation between the increase in imports and serious injury suffered by the domestic industry as import in absolute term increased more than two and a half times during the year 2015-16 (annualised) as compared to base year 2013-14 and domestic industry is loosing market share.” The DG added: “I find the critical circumstances exist justifying imposition of provisional safeguard duties immediately in order to save the domestic producers from damage of serious injury which it would be difficult to repair, if the application of safeguard duty is delayed.”
The DG said the “minimum required” rate of the duty was 20% given the average cost of sales of “hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more” by the domestic producers, a reasonable return on cost of sales excluding interest, present level of import duties and present average import prices.
SAIL, Essar Steel and JSW Steel had on July 27 urged the DG to impose safeguard duty on imports of steel products into the country as their performances were deteriorating. Of the steel imports of 9.3 MT last fiscal, more than a quarter was of HR coils, sheets and plates.
The rise in steel imports has primarily form China, but imports from Korea and Japan (with which India has bilateral free trade pacts) have been substantial too. IN recent months, imports from Russia have also been on the rise.
To protect the local industry from import surges, the finance ministry in June had imposed anti-dumping duties between $180 and $316 per tonne on certain industrial-grade stainless steel imports from China, South Korea and Malaysia. In August, the ministry also increased import duty on some steel products from 10% to 12.5%. But the domestic steel industry is not satisfied with these measures and is lobbying for a further hike in import duty to 15%.
Source: Financial Express
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