Even as primary steelmakers are up in arms against rising steel imports that plunged many of them into losses and have found takers for their views in the finance ministry, the commerce department has argued that contrary to what many would think, India hasn’t really been losing out in foreign trade in iron and steel items in recent years, reports Arun S in New Delhi.
Imports of iron and steel may have surged but so have their exports, the department said, adding that net imports of these items haven’t been high enough to cause alarm: While FY12 saw $2.8 billion net import of iron and steel, it decreased to $2.2 billion in FY13 and the following year, the country was a net exporter of the items with a trade surplus of $3.3 billion. Of course, exports and imports have almost evened out in FY15, with both slightly in excess of $16 billion.
In the first quarter of this year, steel imports have increased at a brisker pace than exports but it is too early to resort to overprotective measures to arrest this trend, the department feels.
While one needs to take a view on such things with trends over longer periods in hand, it must also be noted that user industries like automobiles, consumer durables and also the infrastructure sector have benefited from steel imports.
The commerce department’s contention, which is at odds with the department of industrial policy and promotion (which is part of the same ministry) and also the steel and mines ministry, is also that India’s free trade agreements (FTAs) with Japan and South Korea haven’t led to unacceptable increases in imports of iron and steel from these countries.
In the case of Japan, after the relevant FTA came into force in August 2011, import of these items fell from $2.1 billion in FY13 to $1.8 billion in FY15. Imports of iron and steel from Korea, the FTA with which commenced in January 2010, remained almost flat at $2 billion a year between FY12 and FY15.
The counterargument is that steel imports have surged phenomenally in volume terms lately whereas export growth has decelerated. Imports of steel during April-July FY16 rose 69.5% to 3.9 million tonnes (mt) over the same period in FY15, according to Confederation of Indian Industry data, mostly derived from the official Joint Plant Committee estimates. Exports of steel declined by more than a quarter to 1.1 mt in this period from 1.5 mt during the period in FY15. However, commerce department data showed that in value terms the differential was less in iron and steel foreign trade, with exports during April-June pegged at $2.1 billion and imports at $2.6 billion. The DIPP and revenue department argue that among major steel companies, SAIL, JSW and JSPL posted net losses in Q1 of FY16, while Essar Steel and Tata Steel saw lower net profits.
To protect the local industry from import surges, the finance ministry in June had imposed anti-dumping duties between $180 and $316 per tonne on certain industrial-grade stainless steel imports from China, South Korea and Malaysia. In August, the ministry also increased import duty on some steel products from 10% to 12.5%. But the domestic steel industry is not satisfied with these measures and is lobbying for a further hike in import duty to 15%. It has also sought safeguard duty (used to curb sudden steep rises in imports) and raising anti-dumping duties on imports from China and impose such duties on imports from Russia and Indonesia.