We object in principle to the US action on steel imports, says Aruna Sharma

With South Korea and Japan, we have free trade agreements, where we have zero per cent duty, says Aruna Sharma, secretary to the Ministry of Steel

ARUNA SHARMA, secretary to the Ministry of Steel, to Megha Manchanda & Jyoti Mukul on the US adminstration's raising of tariffs on import of this commodity and aluminium. Edited excerpts:
 
Is the government worried at the impact of the 25 per cent tariff on steel and 10 per cent on aluminium imported in the US from all countries?
We are the 10th biggest exporter (of steel) to the US; our exports have gone up 16 per cent from 2011. It is not that our export growth is highest. Russia’s steel exports to the US grew 140 per cent while China’s dropped; they are 11th in number.

 
The US imports only 35 million tonnes (mt, of steel). Of that, Canada and Mexico, which are Nafta countries (in a free trade pact with the US), export 10 mt. Brazil and Korea export another 10 mt. In the remaining 15 mt, the European Union — Germany, the UK and others — is the big contributor. India is small. Of our total (steel) exports, only two per cent goes to the US, so immediate discomfort will not be felt. This two per cent can find new markets, in Europe and other places.

 
Our objection is that unilateral levying of tariffs under Section 232 (of the US law) is not according to the World Trade Organization's (WTO's) agreed principles and any country resorting to this will lead to a tariff war. They already have 14 anti-dumping and countervailing duties against us.

 
Canada and Mexico have got an exemption. Is India, too, looking for one?
The tariff order was signed last week and is unveiling itself. President Donald Trump has mentioned about friendly countries being exempted and we are seeing which these are. If it takes care of South Korea and Japan, the major exporters are out. Then, having differential treatment for others will be a major issue.
 
Trump’s statements about India are not very friendly. Will India get an exemption?
We will have to wait and watch. Tomorrow, we can change our product mix and, so, there can always be a shift. Being a small portion, it will not distort our steel business, which meets the domestic demand. India is a big automobile hub and will require steel. Our strategy for enhancing steel production is not export-based. We will not be contributing to the excess capacity created across the globe. Our need is of more, to produce more and consume more. The dependency of Indian steel on export is not much but, in principle, we have an objection.

JSW Steel Chairman Sajjan Jindal has said India should take measures similar to the US to protect its industry.
 
We have an anti-dumping duty which is on everybody. We have cleared all the WTO tests and are protected against dumping. With South Korea and Japan, we have free trade agreements, where we have zero per cent duty. What we impose is the anti-dumping duty but what the US has done is a flat duty. It does not make sense to put a duty which is not WTO-compliant. MIP (India's imposition of a minimum import price) was a short thing and was phased out. It was something like an emergency patchwork.

 
The Indian industry has been taken care of; they are insulated against dumping. The rest is their capability and competitiveness. The Indian industry has responded very well. That kind of insulation for industry will continue and India strongly believes in taking measures that are WTO-compliant.
 
Analysts fear Japan, China and Korea will further push steel into the Indian market if the US market turns tough.
China is sending only one per cent of its exports to the US, only 784,393 tonnes. Japan and South Korea send 1.7 mt and 3.6 mt, respectively. They are exporting automobile-grade steel. So, it does not look likely. WTO provides enough opportunity for tariffs, based on evidence.

 
Is the steel sector in challenging times, with the US developments and insolvency?
Not at all. The steel industry is focused on domestic consumption, which is bound to go up because of the infrastructure deficit. The government is focusing on this deficit and, second, India is a young country. Being one, more and more housing will be required. That is where the steel industry has an opportunity.
 
India had become the dumping ground for steel and that has been prevented. If you look at steel plants, there is no problem. They are paying wages to employees, paying their dues in the market, they are producing steel and their Ebitda (operating profit) is positive. The problem came from their balance sheets and that is where (many loans taken) became NPAs (non-performing assets). As a sector, we would like it to be resolved as early as possible, so that more production and expansion plans start off.