A day after DPIIT secretary Amardeep Singh Bhatia questioned repeated requests from India Inc to raise tariffs to protect domestic industry, Union steel minister H. D. Kumaraswamy has reiterated that the government is considering imposing safeguard duty on steel.
“The process is going,” Kumaraswamy told news agency PTI on the sidelines of an event in Delhi when asked about the steel ministry’s proposal to impose a 25 per cent duty on steel imports.
Earlier this month, the minister led a team of top steel CEOs and owners to meet Union commerce minister Piyush Goyal, appealing for a safeguard duty. While there is demand from steel producers for tariff hikes, the steel user industry is opposed to the idea.
On Wednesday, Bhatia asked why the Indian industry has not been competitive yet to face import. With Donald Trump returning to White House, India is expected to face heat for keeping high tariffs.
The steel import, however, is mostly coming from nations that have a free trade agreement (FTA) with India, such as Japan, Korea and Vietnam. Import duty will not work on them.
According to Icra, imports will reach 11.3 million tonnes this year, surpassing the previous high of 2015 when it reached 11.2 MT, leading to major distress for domestic producers. While China accounts for 39 per cent of import, the share of FTA countries together is about 59 per cent.
However, the share of imports in total domestic consumption is going to be 7-7.5 per cent this time compared with over 10 per cent in 2015.
The Indian government had imposed a safeguard duty of 20 per cent in 2015 but the protection came a tad too late and the damage was already done. Chances are the Centre may impose, if any, less than what was done before given the difference between domestic price and the landed cost of import is about $12-15 a tonne.
All major steel makers have warned that rising steel imports could jeopardise their planned capex through this decade. Icra also concurred that domestic players would find it difficult to maintain capacity utilisation over 80 per cent, spend on expansion within the guardrail prudent leverage, in a report published on Thursday.