Taking cue from US steel industry

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Published: March 11, 2015 12:05:53 AM

According to a recent report on the US strategy to tackle the threat of rising steel imports that has already captured...

According to a recent report on the US strategy to tackle the threat of rising steel imports that has already captured around 28% share in the domestic steel market, the US steel industry has lent its solid support to ENFORCE the Law Act of 2014.  This Act enables the House of Representatives and Senate to force the highest executive body (in this case the President of the US) to faithfully execute the laws of the US, in the absence of which the US Supreme Court can even sue the President for any violation of the existing law.

For instance, US industries can seek and get relief if trade remedies as per law are violated and not implemented. In India there exists an Enforcement Directorate whose job is primarily to identify the circumvention of the existing law of the land and book the culprits.

Unfortunately our law permits a host of dispensations to existing laws apart from an all-pervading slackness to monitor the implementation.
Many of our stringent laws relating to safety, health, baby food manufacturing, quality specifications lose much of their effectiveness due to ingenuous ways devised by manufacturers/distributors to evade the prescriptions of the laws. In some cases, the stringent specifications remain on paper as various interpretations subsequent to the original promulgation of the law make them inapplicable while being implemented.

About two and half years back, a mandatory quality order notification prescribing the norm of production and storage for a group of steel categories was issued by the ministry of steel. However, the latest data on steel imports reveal that there has been a surge in imports exceeding 67% during April-February 2014-15 over the last year and a good percentage of these imports had taken place in grades that are currently not exactly conforming to the one specified in the notification.

The industry is not aware if the international grades under which these steel categories have been imported have been duly mapped against the Indian grade specified in the order at the time of entry to Indian shores. If not, the entry becomes unlawful and if yes, is that (equivalent international specifications) covered under the notification?

The US steel industry has petitioned to the government on rising steel imports (36% more than last year) on account of imported consignments enjoying government subsidies, evading duties by misdeclaration, changing the point of origin, currency manipulation. Although most of these factors are duly taken care of in existing trade remedies, the US steel industry is much perturbed that implementation of these remedies is somewhat relaxed and not in true letter and spirits.

Significantly, the industry is supporting the recent placement of the Levelling the Playing Field Act which would reposition the steel industry in the trade laws considered to be turning liberal in allowing imports. Further, the US steel industry urges that all new trade agreements must include stricter provisions for trading partners for refusal to cooperate in trade investigations, advantages accrued on account of currency manipulation, government subsidies and others.

The Indian steel industry must take cue from these developments. The very structure of the Indian steel industry predominated by a few large players gives an impression that it does not require more support. There is no denying that there is any room for subsidies for the industry, but it can legitimately demand trade remedies and rigorous implementation of existing rules to prevent surging imports. Trade agreements must take into account the concern of all industrial segments that have invested and are planning to invest heavily in creating capacities to meet the expanding domestic market and must not become a tool for utilisation of surplus capacities in other countries, thereby killing indigenous entrepreneurship.

The author is DG, Institute of Steel Growth and Development. The views expressed are personal

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