Statistics always reinforce a premise and take forward a hypothesis beyond the realm of uncertainty. It is universally true that a well laid out framework and established method of collecting statistics help a country draw pragmatic policy measures on the economy, industry and social issues.
One most interesting aspect of statistics lies in the manner in which these are interpreted by users in order to justify different views on the same subject. Recently quoted media reports on import and export of steel (in volume and value terms) and the inference on reducing net import balance by the ministry of commerce is one such example.
The data published by JPC under the ministry of steel is the official source of data on iron and steel in the country and is well accepted by the World Steel Association and other national and international agencies. JPC releases, inter alia, data on import and export of steel also.
The MOC relies for trade data on DGCIS sources. As per this source, the value of “imports of iron and steel” in FY15 came to $12.3 billion. It is then added to the value of “imports of semi-and finished iron and steel items” worth $4 billion (whatever that may define) to arrive at total imports of iron and steel at $16.3 billion in FY15.
It is therefore concluded that the total value of imports of iron and steel is only marginally higher than the total value of exports of iron and steel at $16.2 billion.
In fact, this net import value is steadily coming down from FY11 as per the available data. So where is the threat of massive imports of steel that the domestic industry is cribbing about?
Let us look at the JPC sources. Total imports of iron and steel (finished) in FY15 came to 9.32 million tonne, valued at Rs 44,893.03 crore or $7.30 billion (@Rs 61.5=$1). This may be added to semi finished iron and steel imports valued at $0.34 billion and imports of other iron and steel items like fittings, miscellaneous steel items, scrap, pig iron, sponge iron and ferro alloys valued at Rs 39,613.94 crore or $6.44 billion, together totalling $14.08 billion.
On the same basis, the total value of export of iron and steel (including export of iron and steel items) in FY15 comes to $10.22 billion, yielding a net import value of $6.08 billion which is substantial and reiterates the threat perceived by the domestic industry.
The threat of imports is indeed real if one considers volume growth.
It is seen that total imports of iron and steel (finished and semis) in FY15 at 10.02 million tonne, which is nearly 75% more than the previous year, can be compared to total exports of iron and steel at 5.94 million tonne (lower by 8% in FY14) making India a net importer of 4.08 million tonne.
It is felt that indigenous steel producers were capable of meeting nearly 70% of the total import volume, but for the prices which in most of the cases can be termed as predatory, either coming under dumping category or imported at negligible duties under RCEP.
Under the above circumstances, there is an immediate need to relook at the definition of imports of iron and steel items interpreted by different sources before any firm conclusion by the commerce department is arrived at the import threat perception. It is also a fact that lack of investment, high capital costs, poor growth in steel intensive manufacturing sectors like capital goods and a few items under the consumer durable segment has depressed steel consumption growth, that has plummeted to 4.6% in the first five months of this fiscal.
But there is no denying that unabated flow of imports (at 4.5 million tonne @ 51% growth) has added to the woes of domestic producers by enhancing the share of imports in the domestic market to 14% from an average 9-10% only in the recent past.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal
