Finance ministry has ruled out any further hike in import duty after raising it recently by 2.5 percentage points on steel products
With the finance ministry unlikely to raise import duty further, the domestic steelmakers will soon propose imposition of anti-dumping duties on the alloy imported from China, Japan, Korea and Russia.
“Imposition of anti-dumping and safeguard duties have become necessary as surplus steel from China, Japan and Korea are flooding the domestic market.
Russia and Indonesia have also increased exports of steel to India given the depressed global prices, with the latter also making use of a free trade agreement. This has hit the domestic steelmakers hard. Already many countries have raised duties or have taken other steps to prevent dumping of steel,” Jayant Acharya, director (marketing) JSW Steel said.
While anti-dumping duties are country-specific, safeguard duties are product-specific. So steelmakers would have to apply separately for dumping duties on steel imported from different countries. The quasi judicial process for ascertaining and determining if dumping actually takes place has to be completed too.
These duties are imposed if an investigation establishes that the exporter is selling in India below his cost
and such dumping causes ‘injury’ to the domestic manufacturers.
The duties would vary depending on the dumping margins determined. Unlike safeguard duty which prevail for shorter tenures, anti-dumping duties are generally rather long-term in nature.
Hit by a tepid demand and sharp decline in prices, domestic steelmakers have sought a safeguard duty on hot-rolled coil, sheets and plates.
After a consultative meeting with the domestic steel majors on July 27, the director general of safeguards in the finance ministry may impose the duty any time now, according to industry sources.
Sources said the finance ministry has ruled out any further hike in import duty after raising it recently by 2.5 percentage points to between 7.5-10% on a wide range of steel products. Industry did not benefit much from the duty hike given India’s free trade pacts with major steel-producing nations like Korea and Japan.
While seeking for an anti-dumping duty from imports from hugely-surplus China is understandable where steelmakers get government sops to dump products at below their production cost not only in India but in other countries also; any demand for imposition of anti-dumping duty from imports of Japan and Korea, which are already enjoying duty benefits accruing from the existing FTA pact, may seem baffling.
However, industry sources said while both Japan and Korea selling products in their respective domestic markets at around $510 per tonne; they are “dumping” the same product to India at $340 (FoB). Under the FTA, they pay a little over 1% customs duty now for exporting steel to India.
“Galloping imports are gradually replacing the domestically produced steel. While during the April-June period, Indian consumption has gone up by 1.3 MT, imports have zoomed 1 MT. In other words, imports accounting for nearly 80% of the incremental steel consumption in India. This has to be stopped,” Acharya said.