After a raft of measures including imposition of safeguard duty and minimum import price, Finance Minister Arun Jaitley on Monday said the Indian steel industry will revive in the next three quarters
Pointing to the adverse situation in the steel sector due to dumping of cheaper steel by China, Jaitley blamed the UPA government for not taking action at the right time.
“Our Government has not only notified MIP to help the domestic steel market but also introduced Safe guard duty and increased the custom duty rates to protect the industry. These steps have been taken in the last few months," Jaitley told lawmakers in Lok Sabha.
Companies have started receiving benefit of MIP, which will curtail import of Chinese steel lower than the floor price. Indian Steel companies have already begun receiving benefits of Government’s efforts to protect the domestic steel sector and are sure to recover out of the situation soon, he said.
Pointing at the Economic Survey, Finance minister said “ Economic survey this year has dedicated a chapter ‘Twin Balance sheet’ which clearly highlights the fact that disbalance in the balance sheets of some sectors including the steel companies has direct/ indirect impact on the balance sheets on the Banks”.
In February, the government imposed minimum import price (MIP) ranging from $341 to $752 per tonne on 173 steel products ranging for offsetting the adverse impact of Chinese dumping of steel at $300-350 tonne and distorting the market in India.
Global steel prices slumped after sharp slowdown in China, which has over the decades ramped up capacity to 1.25 billion tonne and continues to produce 800 million tonne, much in excess of its domestic demand. The Himalayan neighbour along with other steel producing countries continues to dump steel in India.
According to World Steel Association (WSA), India is the only country among major steel producing nations, such as China, Japan, South Korea and the US, which witnessed growth in production in 2015. India's steel production rose by 2.6 per cent to 89.6 million tonne in 2015 against 87.3 MT in 2014 even as global production dropped by 2.8 per cent to 1,622.8 million tonne in 2015.
Although India imposed a safeguard duty of 20 per cent on imported steel to protect the domestic industry, it was not enough to prevent the onslaught of dumping of cheaper steel products by some of the steel producing nations.
The price of steel in the international market has come down by around $150/tonne and that has made Indian steel uncompetitive and crimped profit margins.
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.
Source: BTVIN