 "GTRI calls for assessment of steel industry before imposing safeguards")
Economic think tank GTRI on Thursday called for a comprehensive assessment of the Indian steel industry to evaluate the impact of existing import measures before imposing the proposed safeguard duty.
The Global Trade Research Initiative (GTRI) report has also claimed that the commerce ministry's ongoing safeguard investigation into alleged jump in imports of certain steel products suffers from "several" technical weaknesses such as focus on products with minimal import surges, and inappropriate use of global safeguards.
The report has stressed that any new measures should be based on a clear understanding of the implications of existing measures for the industry and the broader economy.
"Conduct a study on the state of the steel industry in India and assess the impact of proposed and existing import measures on resulting higher costs, economic growth and jobs. Take any new action after this assessment," GTRI Founder Ajay Srivastava said.
He said that the current system comprising Quality Control Orders (QCO), Steel Import Monitoring System (SIMS), and No Objection Certificate (NOC) requirements is "overly" complex and inefficient.
The GTRI report has suggested that a high-level review is essential to simplify these processes and make compliance automatic and hassle-free.
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"The licensing process for foreign manufacturers should be easier, with potential collaboration with international labs for quality control," it said, adding the import process has become overly bureaucratic and inefficient, causing delays and unnecessary hurdles for importers.
The Directorate General of Trade Remedies (DGTR), under the ministry, last month has started the investigation into imports of 'Non-Alloy and Alloy Steel Flat Products', used in various industries, including fabrication, pipe making, construction, capital goods, auto, tractors, bicycles, and electrical panels.
MSME exporters from the engineering sector have stated that any move to impose additional duties on steel imports would make domestic products uncompetitive and impact the country's outbound shipments from the sector.
Hand Tool Association Chairman S C Ralhan has said that the MSME engineering exporters are already facing problems on the liquidity front and high prices of steel in the domestic market.
According to the notification of the DGTR, the Indian Steel Association, on behalf of its members - ArcelorMittal Nippon Steel India, AMNS Khopoli, JSW Steel, JSW Steel Coated Products, Bhushan Power & Steel, Jindal Steel and Power, Steel Authority of India - has filed an application under the customs tariff Act, 1975.
They have sought imposition of safeguard duty on imports of these products into India.
Safeguard measures in the form of duty or quantitative restrictions are trade remedies available to the World Trade Organization member-countries. They are imposed to provide a level-playing field to domestic players in case of sudden and significant increase in imports of a product.
According to the industry, the existence of significant excess capacity far exceeding domestic consumption in China, Japan and South Korea have arisen due to slowing demand in those countries.
Further the GTRI said that as most imports are from FTA (free trade agreement) partners or China, investigations should use FTA-specific safeguards and anti-dumping/safeguard measures targeting China.
"Using global safeguards could lead importers and foreign governments to challenge them at the WTO (World Trade Organisation). Looks like incomplete case details are shared with the DGTR by the domestic industry," it added.
The report cautioned that the safeguard duty is being proposed on steel flat products that play a vital role in the national economy, serving as critical inputs across diverse sectors.
Crude steel production has increased from 109.14 million tons in 2019-20 to 144.04 million tons in 2023-24 while consumption has gone up from 100.17million tons to 136.25 million tons in the same period.
It said that in FY2024, India met 94 per cent of its steel demand through local production, with imports accounting for only 6 per cent.
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