The notification issued by the Director General Foreign Trade (DGFT) on December 11, 1998, lays down the condition that import of HRC will be permitted only if the minimum CIF value of the HRC is $302 per metric tonne.

This notification has resulted in the Government giving the domestic HRC manufacturers a mandate to raise prices by Rs 4,655 pmt amounting to Rs 5,088 crore, which will have to be borne by the cold rolled steel manufacturers (CORSMs) and other down stream industries.

Pleading for justice SP Jain, chairman, CORSMA, said that the notification has sounded the death knell for the industry in the country. HRC is an intermediate product and a basic input for CR, galvanised and colour coated steel manufacturers, constituted about 70 per cent of their production cost. This notification has raised input costsexorbitantly and made production unviable as importing finished products are cheaper, than manufacturing locally.

The current international price of HR coils from European suppliers ranges between $180 to $220 PMT C&F Indian port. The anti-dumping authority after an in-depth analysis of the production costs (including 10 per cent profit margin) and the international prices, had determined $245 as the floor price. At new price, even the anti-dumping notification is irrelevant.

Moreover, the HR producers have been exporting HRC at around $180 PMT FOB apart from the benefit derived under DEPB scheme.

The notification has resulted in the differential between the CIF value for HR coils and CR coils. As a result of this distortion, it is now cheaper to import CR coils/sheets and galvanised sheets than to manufacture them, subjecting the entire CR and galvanising industries to a negative rate of protection, stressed Shahra, vice-chairman, CORSMA.

The CIF values stipulated in the notification no 35, wereworked out on the basis of the FOB prices indicated in the metal bulletin published from London. However, these prices are only list prices and of an indicative nature for comparative studies and not the actual sale prices, added Shahra.

Moreover, other factors like devaluation of Indian rupee vis-a-vis the dollar, 36 per cent protection through customs duty, impact on other segments and the engineering industry have also not received due consideration, while fixing the CIF values for HR coils at this high level.

As expected, the high CIF values of HR coils has promoted cartelisation amongst the indigenous HR coils producers and they have sharply hiked the prices by Rs 2,000 per tonne on January-March '99 deliveries.