Engineering exporters’ body EEPC India expects engineering exports to fall around 15-20% in FY17 if the government continues with the minimum import price (MIP) for steel products and safeguard duty for certain steel items, Arun Kumar Garodia, Regional Chairman of EEPC, told ISMW.
In FY16, engineering exports fell to $59 billion from $70.5 billion in the previous fiscal owing to increased competition from China, he said on the sidelines of a workshop on “ATA Carnet” organised FICCI in Kolkata.
“The government's decision to extend the safeguard duty on some steel imports is "anti-SME" and will make India's engineering exports uncompetitive. We feel this is a completely discriminatory judgement and does not take into account the impact of the negative effect the continuation of the safeguard duty will have on the global competitiveness of user industries. While a huge level of protection is being given to the steel units, including those in the large sector, there are reports about a further package for them. We have no problem with that but let protection to one sector not spell death knell for the user-industries, which are also battling the global slowdown and domestic demand compression," he said.
Apart from imposing the MIP on steel products, the government has extended the safeguard duty on some steel imports by two years, till March 2018, to protect the domestic industry from the onslaught of cheap supplies from China amid a global glut.
The duty will, however, be reduced to 10% in stages over the next two years.
"The continuation of the safeguard duty not only makes engineering exports uncompetitive, but also there is no specific reason for the levy on HR coils, which is a basic raw material for engineering products, especially when the MIP has already been slapped," he added.
The government had first imposed the safeguard duty in September last year. In February, a floor price on imports was set to deter countries like China from undercutting the domestic industry, the first such move in more than 15 years.
The duty would drop in stages to 10% for the six months through March 2018. It will be 18% for the period between September 14, 2016 to March 13, 2017; 15% during March 14, 2017 to September 13, 2017; and 10% during September 14, 2017 to March 13, 2018.
Facing the domestic economic downturn, China had last year raised its exports of steel products, leading to new duties in several markets like India and the European Union, as well as anti-dumping investigations.