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The government has imposed a 20 per cent ‘safeguard duty’ on certain imported steel products for 200 days, due to a glut of import, Finance Minister Arun Jaitley said on Monday.
It has been imposed on hot-rolled flat products of non-alloy and other alloy steel, in coils of a width of 600 mm or more. It takes effect right away.
Safeguard duty is allowed under World Trade Organization rules as a temporary measure for a specified period to check damage to a country's domestic industry from cheaper import.
The Directorate General of Safeguards (DGS) under the Central Board of Excise and Customs examined the application from major producers — Steel Authority of India, Essar Steel and JSW Steel — and said it found “prima facie increased imports of (certain kinds of steel) have caused or are threatening to cause serious injury to domestic producers.”
Producers had complained of a surge in import of hot-rolled steel and variants from China, Korea, Japan and Russia. The three Indian companies represent half of home production and had petitioned DGS, for imposition of the levy on import of hot-rolled flat products of non-alloy and other alloy steel in coils of width of 600mm or more for four years.
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DGS says the market share of domestic producers has been declining since 2013-14 and is likely to fall from 45 per cent then to 37 per cent in 2015-16.
The producers also sought the safeguard duty as it would also cover import from Japan and South Korea, with which India has free trade pacts.
Integrated steel producers have welcomed the move. “It will bring about balance in the demand-supply situation in the domestic steel sector but I don’t see it pushing steel prices higher in the near term. What could immediately happen is stability in the demand-supply situation. Prices will move up gradually but it’s difficult to give a timeline for that,” Jayant Acharya, director (commercial & marketing), JSW Steel, told Business Standard.
H Shivramkrishnan, chief commercial officer, Essar Steel, said, “This decision is a step in the right direction and recognises that the surge in import of hot rolled steel coils at unfair prices is a serious threat to the survival of the Indian steel industry. It also demonstrates that the government will step in quickly to address such concern and ensure support to the ‘Make in India’ vision of the prime minister.”
Last month, the government had raised import duty on base metals, including iron and steel, by 2.5 per cent. This was to help domestic entities battle cheaper Chinese import after that country’s currency devaluation.
The safeguard duty is imposed by the revenue department on DGS' recommendation.
In June, India imposed anti-dumping duty of up to $316 per tonne on import of certain steel products from three countries, including China, to protect domestic producers from below-cost inbound shipment.
