The Association of Indian Forging Industry (AIFI) has expressed shock over the demand made by the steel companies to increase the import duty from 5% to 15% and said that the move will hit the industry hard leading to more job losses as the industry is already passing through a difficult period due to poor offtake from the auto sector.

The Association has urged the Union government not to increase the import duty. A hike in duty would lead to a spiraling rise in prices once again. Increase in price of steel will have a two fold impact – rendering the Indian auto component manufacturers uncompetitive, spike in inflation which means interest rates cannot be cut and an internationally loose monetary policy cannot be pursued. The association said that these measures are essential to cushion the economy from falling into a deep and long drawn recession, said V Krishnan, President, AIFI.

?Hence, for the above reasons, the union government and all policy makers should allow steel prices to reduce to international levels or even lower so that Indian auto component manufacturers can regain export competitiveness and survive,? he added.

According to him, in early 2008 when the steel prices were increasing, the user industry mooted a proposal to the government to bring in a regulatory mechanism to check the runaway profs of steel mills. This proposal was set aside since it is not in line with open market economy policies.

At all times the steel industry was claiming that prices in India were lower than international prices when it was not so. The ex-factory prices in India have always been higher than ex-factory prices in most countries. In addition, prices in India rose first and then prices of steel in international markets went up, he pointed out.