With over 81% rise in imports of HR coils during April-January of this fiscal, the government has no immediate plan to withdraw the safeguard duty imposed on this benchmark steel product on September 14 last year, even though a minimum import price (MIP) of $445 a tonne was announced for this item earlier this month.
The government had said it would review the MIP, imposed for six months, after a couple of months and won’t hesitate to abolish it if domestic steel producers use the higher protection to over-price their products in the domestic market.
Only 30 product lines of HR coil are subjected to the safeguard duty, while MIPs have been imposed on these and another 143 items. As per the announced plan, the safeguard duty, levied at 20%, is to remain for a period of 200 days since September 14.
The safeguard duty itself translates to Rs 6,000 given the MIP. These, together with the customs duty, makes imported HRC costlier than domestic items by Rs 7000-8000/tonne. While this would benefit the primary producers like SAIL, Tata Steel and JSW Steel, secondary producers and other steel users would suffer. Compared to 1.57 MT imports in the April-January period of the last fiscal, HR Coils imports have surged by 81.5% in the April-January period of the current fiscal to 2.85 MT.
India had imported 2.34 MT HR Coil in entire 2010-11, 1.81 MT in 2011-12, 1.87 MT in 2012-13, 1.1 MT in 2013-14 and 2.0 MT last fiscal. While HR Coil constitutes around 20% last fiscal of the total steel imports of 9.32 MT, in the current fiscal so far, it has gone up to 28%.
Countries with excess steel capacity such as China, Japan and Korea have been dumping steel to India adopting predatory pricing strategy at prices which are even lower than their cost of production. This has led to a significant decline in steel prices and caused great injury to the domestic industry, which employs over seven lakh people directly.
While the General Agreement on Trade and Tariff advices its members countries of WTO not to impose MIP, this measure is not in violation of India’s foreign trade policy. MIP had earlier been imposed on imports of cardamom, areca nuts and marble.