India is Actively Deploying its Steel Anti-Dumping Tools

Rarely do a government’s stated aims and the aspirations of industry align quite so perfectly as they do in today’s India regarding steel.

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Prime Minister Narendra Modi’s government has been championing a “Make in India” mantra since coming into power in 2014. It has manifested itself in various ways and most intensely with the state-run enterprises who are more open to government pressure. Even so, it has become a pervasive theme across the entire national economy, coercing companies to finds ways of buying domestically in rupees rather than directly importing materials and paying in foreign currency.

Infrastructure Investment

At the same time, the government has identified infrastructure as a major hindrance to India’s growth and a key investment priority in the decade ahead. They are trying to encourage private/government partnerships, but where that fails direct state investment may prove the only option.

The Times of India quotes state steel producer Steel Authority of India Limited (SAIL) Chairman P.K. Singh as saying the country will make an estimated infrastructure investment of $1 trillion with projected growth in manufacturing at 11-12%. A rise in the urban population and the emergence of a rural market for steel will all contribute to the high growth rates in domestic demand for steel and other metals, Singh said.

Supporters of the infrastructure plan point to World Steel Association data saying India’s low per capita consumption of steel, just 59.4 kilograms per person in 2014 against, a global average of 216.6 kg is reason enough to expect a radical rebalancing in the decade ahead as demand picks up for middle-class living.

Set that against a backdrop of a sluggish global economy, a slowing China, massive overcapacity in global steel and aluminum production and you have a recipe for strong imports as overseas producers rush to take a slice of that pie.

Protecting Indian Steel

Hence, India’s increasingly protectionist response. India has never been a nation that embraced tariff-free trade. India is,l rather, building on a swath of import duties, tariffs and quotas across the metals sector.

Along with the U.S. and Brazil, India is said by the World Trade Organization to be one of the world’s leading initiators of anti-dumping investigations. Earlier this year, India added to the range of minimum import prices it sets, and its steel industry is pushing for MIPs on 173 steel products to be extended beyond August when they were due to expire.

On aluminum, the India’s Mining minister has invited the industry to press for an increase in import duties on primary products, saying the ministry is looking at a proposal to raise import duties by an additional 2.5%. Pressure has been mounting for more protection from Chinese imports. Back in February, Finance Minister Arun Jaitley said in his budget speech that the Basic Customs Duty was being increased for primary aluminum from 5% to 7.5% and the duty on aluminum products from 7.5% to 10%.

Have Import Duties Helped India?

All this is not without results. Steel imports are declining even as steel consumption in India is rising.  Imports declined by 41% to 0.546 million metric tons in May this year compared to the same period a year-ago. During the previous month,  April, steel imports were down 15.5% year-on-year at 0.654 mmt.

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Meanwhile, Indian steel producers are looking, in the longer term, to ramp up production behind their barriers. Consumption was 90 mmt in the fiscal year ending March 31 on India’s calendar, but it’s seen rising to 210 mmt by the middle of the next decade as India’s GDP is forecast to grow five-fold by the 2030s. Whether the world needs more steel production is, maybe, not high on the agenda for the Indian government… but the belief that India needs more steel production certainly is.