The Indian government recently imposed import duties, for a term of five years, on stainless steel from China, the US and the European Union. The move has evoked mixed reactions from industry and analysts.
The anti-dumping duties are an attempt to protect local companies from “unfair competition.”
Anti-dumping duties, on cold-rolled flat stainless steel products, ranged from 4.6 to as high as 57.4%. Along with the above-named countries, imports from South Korea, South Africa, Taiwan and Thailand will also be taxed.
While a large section of India’s domestic steel industry welcomed the move, some experts opined that the duty did not make much sense, except, of course, for protecting local steelmakers.
In an interview with the Economic Times, N.C. Mathur, director of corporate affairs at JSL Steel and the president of the Indian Stainless Steel Development Association, said that the anti-dumping duties on cold-rolled stainless steel products were “not likely to help the domestic industry in any way.”
That was because they were imposed after the review of an earlier, similar, notification, and all the conditions remained the same in the new tariff structure.
Do These New Dumping Duties Even Matter?
According to Mathur, the duties are restricted in terms of cold-rolled width — from 600 mm to 1250 mm. The same terms and conditions were already in place under the earlier anti-dumping law, yet, importers had been easily circumventing it over the last five years.
How? They would simply import products measuring above 1,250 mm.
Given the situation, there were two options, Mathur said: the government could either issue a notification under the new circumvention law, or increase the width of steel covered by the import duties to 1,650 mm so that the new anti-dumping duties would be enforced and would actually help.
The only positive outcome of the new anti-dumping duties, Mathur said, was that the government had felt it right to extend the existing five-year term by another similar term.
The Global Anti-Dumping Bandwagon
US steelmakers are not entirely unfamiliar with such a move. In August, as reported by MetalMiner, anti-dumping petitions from US producers AK Steel, Nucor Corp., ArcelorMittal USA, SSAB Enterprises, U.S. Steel and Steel Dynamics alleged that hot-rolled steel flat product imports from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the UK were causing material injury to the domestic industry or being “dumped.”
Indeed, given the current state of the global steel sector, cheaper imports of products, especially from China, is a situation that many steel-producing nations still have to tackle.
The move toward anti-dumping duties by the Indian Government came on the heels of its introduction of a 20% safeguard duty for 200 days on some other steel products in September on the import of hot-rolled flat products in coils of a width of 600 mm and 1250 mm.
Steelmaker heavyweights such as the Steel Authority of India Ltd. (SAIL) and JSW Steel had been complaining that surging imports were squeezing profit margins, lobbying the government for duties on a wider range of products.
Obvious Injury to Domestic Producers
Imposing the fresh set of duties, the Directorate General of Safeguards said it had prima facie evidence that increases in imports were caused or were threatening to cause serious injury to the domestic producers.
Indian Trade Minister Nirmala Sitharaman also indicated that the government would be lobbying for the freedom to raise tariffs temporarily to deal with import surges at upcoming World Trade Organization talks in Nairobi.
Imports of iron and steel declined slightly to $6.9 billion in the first seven months of the current Indian financial year, which ends next March, from $7.1 billion a year ago. Commerce and Industry Ministry data shows.
But an article in Forbes titled, “India’s Mistake In Putting Import Duties On Stainless Steel” by contributor Tim Worstall spoke of it as a “win” producers received over consumers because of the new tax.
He said, “low steel prices really hurt domestic producers. Domestic consumers just aren’t so interested: there’s a million other things to worry about in this life while the producers are obviously highly focused upon steel and its price. Thus, inevitably, in the political process the interests of the producers win out over the consumers. Simply because they pay more attention and shout louder. Yes, even if they’re subsidizing it, even if it’s ‘unfair’ competition through taxes.”