State-run firm GAIL (India) has spoken against the preference given to domestic steel when it comes to government procurement. Protected by high tariffs which keep imports at bay, domestic steel firms are jacking up prices, the gas marketer alleged, in a recent consumer grievance redressal meeting convened by the steel ministry. Currently, domestic steel prices are generally cheaper than landed cost of imports by 5-6%; however, sources said, the local steelmakers quote even higher prices against tenders floated by the likes of GAIL, inflating their project costs, taking advantage of the policy that state-run entities should preferably buy domestically manufactured iron and steel.
GAIL’s representative said at the grievance redressal forum on September 14: “The quoted prices of L1 bidder (for the new tender) are on much higher side as compared to lowest prices discovered from previous tender for supply of bare/coating/coated steel line pipes of API grade for Jagdishpur-Haldia Bokaro-Dharma Steel Dharma pipeline Project. This has implication on project cost.” According to a policy applicable on all government tenders, if an aggrieved buyer registers a compliant, a committee set up under the steel ministry shall dispose it of in four weeks.
The policy favouring domestically manufactured iron and steel was approved by the Cabinet in May this year “with objective of nation-building and encouraging domestic manufacturing”. Providing cushion to the struggling domestic steel industry from burgeoning imports was another reason for formulating the policy. Since the beginning of last year, the steel ministry has come to the aid of the domestic steel industry, providing it with both tariff and non-tariff protections including anti-dumping duty on a host a products. As a result, India’s import of steel declined by over 36% to 7.4 million tonne (mt) in 2016-17. During the April-August period of the current fiscal, imports grew by 16% to 3.45 mt; some of the protective measures like minimum import price were withdrawn. Attempts are also being made by the steel ministry to ensure steady supply of iron ore at cheaper costs to steel units, though these haven’t been successful, following strong objection from miners and the mines ministry.