On account of an almost "stagnant" steel demand globally, particularly in China, major producers are pushing products into the Indian market, which is leading to a surge in steel imports, said the 2015-16 report card of the economy tabled by Finance Minister Arun Jaitley in Parliament today.
Government has taken steps such as safeguard duty, anti-dumping duty and minimum import price to check surging steel imports, but further protection will impact downstream industries, the Economic Survey said.
On account of an almost “stagnant” steel demand globally, particularly in China, major producers are pushing products into the Indian market, which is leading to a surge in steel imports, said the 2015-16 report card of the economy tabled by Finance Minister Arun Jaitley in Parliament today.
The domestic steel industry, with higher borrowing and raw material costs and lower productivity, is at a comparative disadvantage. To check this, government initiated several measures to curb surging imports and make domestic production sustainable, it added.
“Any further safeguards will impact downstream industries as steel is used as an input in different industries like basic metal and non-metal products, machineries, transport, construction and consumer goods,” the Survey said.
It is estimated that for a 10 per cent increase in steel prices due to a hike in anti-dumping or import duties, the cost of production of basic metal and non-metal products will increase by 5.4 per cent, it added.
Besides, cost of production in construction sector will go up by 1.7 per cent, machineries by 1.3 per cent, transport by 0.7 per cent and the consumer goods sector by 0.4 per cent, it said.
During June-August period, the government raised basic customs duties on certain primary iron and steel products by up to 2.5 per cent.
In June itself, anti-dumping duties were imposed, ranging from USD 180-316 per tonne, for industrial grade stainless steel imported from China, Malaysia and South Korea.
Forty countries had initiated anti-dumping measures including the US, EU, Brazil, Mexico and Argentina, and nine countries also imposed countervailing duties (CVD).
In September, government clamped provisional safeguard duty on hot-rolled flat products of non-alloy and other alloy steel in coils at the rate of 20 per cent ad-valorem for a period of 200 days, while it also reduced export duty on iron ore to 10 per cent for select steel (grade less than 58 per cent iron content).
Earlier this month, minimum import price (MIP) was also imposed on 174 steel products for a period of six months.