About six months after it had abolished the import duty on steel to rein in rising prices, the government on Tuesday restored the 5% duty on the product to avert the ‘dumping’ of cheaper Chinese imports and imports from other countries. Inventories have been building up in China due to slackening of global demand and concerns had been expressed by the domestic producers that cheaper imports would flood India unless the import duty were not re-imposed.
The 5% import duty has been re-imposed on pig iron, semi-finished, flat and long category of products. The domestic steel producers, however, would only be partially happy because they were seeking an import duty of 10% and the steel ministry had also batted for the same.
The re-imposition of import duty comes after the government took a series of measures to help the steel industry, reeling under price meltdown, like removing the 15% export duty on long products, levying an ad-valorem duty of 8% on iron ore fines and restoration of the Duty Entitlement Passbook Scheme (DEPB) in the last couple of weeks.
Due to declining global demand, steel industry is passing through a grim phase as prices have come down crashing by 50% in the last two months.
Early this month the steel producers cut prices of hot rolled coils in the range of Rs 4,000-6,000 per tonne, after which prices have come down to around Rs 32,000 per tonne. In all likelihood it would slip below the Rs 30,000 per tonne mark in the days to come.
Some of the major steel producers have even announced production cuts. The crash in prices has been attributed to slowdown in demand from key end-user segments like automobiles, infrastructure and construction.
Commenting on the re-imposition import duty, Ispat Industries vice chairman and managing director, Vinod Mittal said, “In view of the present market conditions, the industry was expecting a higher import tariff of 20 %.”
Ever since the steel prices started nosediving and demand slumped on the back of global recession, the domestic industry has been apprehending a possible dumping of the commodity by leading steel-making nations like China, Ukraine and Thailand.
To keep cheaper imports at bay, the industry had sought a 15% import duty on steel, besides levying of 14% countervailing duty on imports of the commodity. Endorsing the industry’s concern, the steel ministry had last month recommended imposition of 10% import duty on all categories of steel to the finance ministry.
