New Steel Policy in India on Docket as FTA Pressure Builds

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The light can be seen at the end of the tunnel — a new steel policy is not too far from being formalized.

India expects to announce its new policy soon, replacing the current one which was passed in 2005.

While the steel sector debates the finer points in the draft of the steel policy, the cry to delete steel from the Free Trade Agreement (FTA) between India and countries like Japan and Korea just got shriller.

It has not reached the level of intense lobbying yet, but increasingly, steel majors in India are voicing concern on what they dub as “unfair competitive edge” for steel companies from these countries.

The latest Indian company to fire off a salvo was Essar Steel, which asked for the removal of steel from the FTA “in the interest of the domestic steel sector.” (Just yesterday, MetalMiner wrote about the WTO tussle between the US and China.)

A report put out by India’s news agency Press Trust of India (PTI) while quoting Essar Steel Executive Director of Strategy & Business Development Vikram Amin said there was a definite case to exclude steel products from the sphere of the free trade agreement with Korea and Japan.

He felt that it made sense for Indian companies to be exporting steel rather than exporting iron ore and importing finished steel, because of the high value addition in the steel industry and its potential to generate employment.

India had signed an FTA with Korea in January 2010 and with Japan in August last year. Under this agreement, duties on most of the products are either eliminated or reduced sharply. While import duty on Korean and Japanese steel products have been reduced to 3.13 percent from 5 percent in 2010, imports from other geographies attract 7.5 percent import duty.

Essar is voicing concerns raised by others in the recent past. In the earlier weeks and months, other Indian steel majors and representative bodies, too, had made similar demands.

To be continued in Part Two later this morning. 

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