Indian Steel Producers Pushing for 20-25% Import Tariffs

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If the US steel industry wants to look for valid grounds for unfair trade practices they need look no further than what is currently going on in India.

India is both the fifth largest steel producer and consumer in the world, and according to the Indian IBEF is the only country to post a positive overall growth in crude steel production at 1.01 per cent for the January-March period of 2009.

After opening it’s markets with (for India) nominal import duties of 5% in the middle of this decade the producers have now reacted swiftly to the current downturn in the global steel industry with calls for a tariff increase to 20 to 25% according to this Reuters article. With predictions that domestic steel consumption will grow (India consumes only 46kgs per head compared to the global average of 150kgs according to the country’s steel minister quoted in the article) with massive planned investments in the state owned steel companies SAIL and RINL to raise production by nearly 50%, the same ministry is considering protecting the domestic producers behind massive import tariffs.

We haven’t always seen eye to eye with domestic US producers’ calls for protection. We feel their constant lobbying and focus on this subject is too often a reflection of a deeply entrenched doctrine to keep out competition. But even when we disagree with much of a position, we keep an open mind on new developments, as readers may well have discerned in our position on allegation of China’s currency manipulation last year. Trading partners that raise massive import tariffs and yet expect free access to our domestic markets deserve to be taken to the WTO. India’s steel industry is in rude robust health, with low iron ore and coal prices, low labor costs and relatively low capital costs, the country is competing very effectively on the world stage, as evidenced by world class Indian steel companies such as Bharat Forge. India does not need to increase import tariffs and deserves condemnation if it does.

–Stuart Burns

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