There was a 38% increase in stainless steel imports to India between April and December last year compared to the same period in 2013. This steel sector has now sought government intervention and asked it to increase import duties.
While the manufacturers are pleased that India’s infrastructure spending is going up, they hope that construction spending will translate into more consumption of their products and they don’t want domestic steel to be left behind.
Already, cheap imports from the Association of Southeast Asian Nations (ASEAN) and free trade agreement (FTA) nations has led domestic steel companies to cut prices to about 7-10% below their cost of production. Another nearly 150,000 tons of imports are expected in the last quarter of the present Indian financial year, adding to the about 420,000 tons already brought in in the first nine months.
The domestic stainless steel industry has added capacity over the last few years to about 5 million tons from the earlier 3.5 million tons a year. Cheaper imports means not only a lower selling price but also idled production capacity that stays, well, idled.
The steel companies want a hike in import duties on stainless steel to 10 from the current 7.5 %, according to the Hindu Businessline.
The steel companies’ worries found an echo in the voice of India’s Minister for Mines and Steel, Narendra Singh Tomar. Tomar has assured the steel majors that he will raise the tax issue with Prime Minister Narendra Modi and Finance Minister Arun Jaitley.
Tomar told delegates gathered at the biggest stainless steel conference/expo held in the world, the Global Stainless Steel Expo INDINOX 2015, that he would pitch in since that was necessary to curb what he openly called “Chinese dumping.” INDINOX 2015 had more than 1,000 stalls, including 50 international exhibitors & participants.
China leads the foreigners with about 35% of the imports to India followed by Malaysia, Thailand and Vietnam. China is reported to have a stainless steel production capacity of about 17 million metric tons a year.
Indian Stainless Steel Development Association (ISSDA) chief N.C. Mathur, while speaking at the expo said China’s contribution in the global production had gone up from 30 to 50% but India was lagging. He pointed out that India’s per capita consumption of stainless steel was 1.9 kg against the world average of 6 kg, which meant there was still massive scope to grow.
The ISSDA is now looking with hope to the Union Budget to be presented at the end of this month for some relief.
Besides the increase in import duties, it has sought abolition of the import duty on raw materials and an increase in the peak rate of basic custom duty for the steel sector from 10% to 25%. This, by its own reckoning, would level the playing field. At least somewhat.