India may double the import duty on stainless steel to 15% to safeguard the domestic industry from the onslaught of dumping by countries like China, a move that improved earnings prospects of steel firms and boosted their shares, said an industry source.
The source said a draft note is being prepared to increase the customs duty on stainless steel after Indian companies complained of cheaper imports that were hurting the domestic sector. Currently, the import duty on stainless steel is 7.5%.
India Inc is divided on the government steps to raise duties on steel products. While domestic steel producers stand to gain from protectionist measures, the end-users, including the auto industry, wants to reap the benefit of multi-year low metal prices globally to lower their cost and improve margins.
In February, India imposed the minimum import price (MIP) ranging from $341 to $752 per ton on 173 steel products. The government amended the Iron and Steel Import Policy conditions to impose the MIP on steel products for 6 months. The move was aimed at offsetting the adverse impact of Chinese dumping of steel at $300-350 ton and distorting the market in India.
While the steel industry cheered the MIP, some of the consumers of steel wanted it to be lowered or abolished.
Last year, India imposed a safeguard duty of 20% on imported steel to protect the domestic industry but it was not enough to prevent the onslaught of dumping of cheaper steel products by some of the steel producing nations.
While global steel demand is waning, India is one of the few markets where the demand for steel is still rising. The industry expects the demand to rise by around 4 per cent as the government is ramping up infrastructure to spur economic growth.