In a bid to check cheap imports into the country, India’s largest steel maker SAIL has urged the government to review the market opening trade pacts with Japan and South Korea.
“We are requesting a review of the Comprehensive Economic Partnership Agreement (CEPA) with Japan and South Korea as it has resulted in a spurt in cheap imports from these nations,” SAIL Chairman P K Singh told PTI.
The chief of the domestic steel giant also warned against excess capacity of the metal globally, especially in China, which can impact firms in India and suggested continuation of the minimum import price (MIP) after August 2016.
Government imposed MIP on 173 grades of steel in February ranging between $341 and $752 per tonne for a period of six months ending August 2016.
“India is the bright spot in steel consumption, but we need to check the spectre of excess capacity in the world and in China, which can cause lot of damage here. I think MIP should be extended post August to check this,” he added.
Explaining the rationale behind the review of CEPA and MIP, Singh said cheap imports have hurt the sales of domestic firms, which in turn has impacted their margins and has posed a threat for the companies to have excess funds to meet their loan requirements.
“MIP has helped domestic firms a lot in these few months. We also need to understand that this situation (cheap imports) is impacting companies sales and in turn is impacting their loan repayment efforts, which if continues will have a negative effect on the loan repayment scenario,” he added.
Last month, Finance Minister Arun Jaitley told Lok Sabha: “The biggest contributor in the NPAs is steel sector. Because if our companies will not be able to sell their steel, it is obvious that they will not be able to repay bank loan and the interest upon it.”
Gross non-performing assets (NPAs) of PSBs increased from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015.
As per government data, helped by MIP and other measures like safeguard and anti-dumping duty, steel imports fell for the second month in May this fiscal declining 41 per cent to 0.546 million tonnes (MT) compared to the year-ago period.
In April too, steel imports were down 15.5 per cent year-on-year at 0.654 MT.
Data also shows that steel imports accounted for 14 per cent of the country’s total consumption, which rose 4.3 per cent in the last fiscal.
India’s consumption of total finished steel saw a growth of 4.3 per cent in 2015-16 to 80.273 million tonnes (MT) as against 77 MT in the previous fiscal, Steel Ministry’s Joint Plant Committee (JPC) data showed.
“Such growth was mostly led by imports, which accounted for 14 per cent in total steel consumed by the country during the year, given that production for sale was down 1.1 per cent during this period,” JPC said.