Indian steel firms seek higher duties on imports as prices drop

Indian steel firms are putting pressure on the government to impose higher duties on imports as trade disputes and a global economic slowdown divert surplus Asian steel stocks to India, industry executives and government sources said.

Local producers are suffering from the double whammy of a rise in cheap imports and low domestic steel prices, which threatens to wipeout the healthy profits made in the past couple of years.

The steel companies have approached the ministry multiple times over the past few months, alleging China, Japan, South Korea and Vietnam are dumping various grades of low-cost steel into the Indian market and stealing market share as a result, three government sources said. Top four steelmakers – JSW Steel Ltd, Tata Steel Ltd, Jindal Steel and Power Ltd and state-owned Steel Authority of India Ltd – who together control over 45 per cent of country’s total steel production, are the key companies who have complained, the sources said.

The ministry has given various indications that some measures might be taken, the sources added. However, they are more likely to be non-tariff measures as India has already suffered defeat in a dispute with Japan at the World Trade Organisation (WTO) on charges that New Delhi unfairly imposed import duties in 2016 to safeguard its steel industry. The WTO upheld Japan’s complaint in November but India is planning to appeal.

India’s steel minister Chaudhary Birender Singh told Reuters earlier this month that the government wants to expand the quality control regime to all steel products very soon. Imports of various grades of steel into India rose by around 8 per cent in the April-December 2018 period, compared with a year earlier, government data showed. During the same period, exports from India fell by more than 17 per cent, making the country a net importer of steel, mainly because the US, one of India’s biggest markets, imposed additional duties last year on steel coming from some Asian countries, including India.

The government is also considering imposing higher duties on the import of iron ore, a key raw material, to help state-owned miner NMDC Ltd, the sources said. While this could hurt JSW Steel, other steel majors have their own captive iron ore mines which shields them from price volatility.

Abhyuday Jindal, managing director of Jindal Stainless, the country’s largest stainless-steel producer, said the company had asked the government review import duty on raw materials, as well as the impact of free trade agreements with the likes of Japan, South Korea and southeast Asian countries.

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