 "Steel")
“To curb imports of steel, duty imposition has to be across the entire value chain and not just on certain types of HR coils. Hence, we (steel producers) have now approached the government to levy safeguard on colour coated and a decision is awaited,” Seshagiri Rao, joint managing director and group chief financial officer at JSW Steel, said at the company's earnings conference last week.
Other steel products of the value chain such as cold-rolled coils, galvanised steel and wire rods among others should also carry duty, said the JSW management.
On September 14, the government imposed a 20 per cent provisional safeguard duty on hot-rolled flat products of non-alloy and other alloy steel, in coils of a width of 600 mm or more for a period of 200 days.
Analysts, however, were of the view that the safeguard duty on HR coils will bring down steel imports.
“Since it usually takes one-to-three months for steel imports to come to India from the time booked, a clear picture of the impact of duty will emerge by December,” said Giriraj Daga, senior analyst with SKS Capital & Research.
As per the Joint Plant Committee data, total steel imports during April-September 2015 were 5.93 million tonne (mt), up 42 per cent from same period last year. Hot rolled coil (HRC) imports were at 2.91 mt in the period under review, up 83 per cent from the same period last year.
The consumer industry, on the other hand, remains concerned about more imported steel products coming under the duty umbrella. It is of the view that such moves will only shrink the manufacturing base in the country and prevent price discovery.
“The steel user industry relies on HRC as its raw material to make down stream products such as cold rolled and galvanised steel. Post-duty, it is left with no other option but to import cold rolled full hard coils for manufacture of galvanised steel and consequently almost about three million tonne cold rolling capacity will become idle,” Mohan Gurnani, president of Federation of Associations of Maharashtra, an industry body representing traders and small businesses in the state, said.
Currently, the landed cost of cold-rolled full hard steel is 20 per cent lower than domestically produced cold-rolled.
"A safeguard duty on more downstream products will also close room for price competitiveness as domestic producers who are already selling these products at higher cost will be able to raise prices further in absence of price parity," said Gurnani.
Cold-rolled coils finds wide application in key sectors such as automobiles, electrical appliances and furniture among others.
"Steel being a B-to-B (business-to-business) segment, though the hit on the end-consumer (like you and me) will be hard, it will be indirect and this is precisely what the end-consumer is not realising," Gurnani explained. "It is finally the end-consumer (like you and me) who will have to shell out much more when buying a car or home appliance," he added.
That's not all. Traders were of the view that tariff on raw material products like HR and cold-rolled coils among others will pave way for cheaper finished goods entry into the domestic market, crippling the entire manufacturing base of the country.
"Via tariff, India may curb steel product imports on one side but it will open door for imports of finished goods on the other side, thus shrinking the manufacturing sector. This will have deep impact on "make in India " campaign," said Gurnani. "So, the larger picture needs to be taken into consideration when imposing safeguard or any such duties."
