The steel ministry has proposed to bring imports of hot-rolled (HR) coils under the restricted list to curb the flurry of imports from China, a senior ministry official said on Wednesday.
“We have written to the finance ministry, saying the open general licence for HR coil imports should be temporarily revoked and the product should be put under the restricted import list,” the official said.
This means that an importer will need to show an end use for importing the product. The process will largely trim imports by traders.
The government restricted HR coil imports in late 2008, during the height of the global economic crisis, and freed it after about a year when things began to normalise.
“We do not want to make imports prohibitively expensive, which will flare up domestic prices also. We only want imports to become sufficiently expensive to bring back domestic prices in line with the global trend,” the steel ministry official said.
HR coil imports, mostly from China, have surged since a fresh debt crisis in some European countries put a question mark on the economic revival in the continent.
China, the world’s largest steel producer, has nearly 100 million tones of surplus capacity and needs to find markets to sell this produce.
With two major markets — the United States and Europe — in doldrums, neighbouring India has emerged as a key market for China’s steel exports.
“We have been informed of instances of under-invoicing by Chinese exporters. Since their production cost is very low, they alone can afford to play this price game,” the official said.
Flooding imports suppress domestic prices, which need to be more or less aligned with import prices.
China has faced international pressure against “unfairly” subsidising its exports through various rebates and control of its currency.
Last month, it acted on both fronts. It unhooked the yuan and took away export rebates for a number of products, including HR coils.
Indian steel companies have decided to keep product prices unchanged this month. They see possibility of a price rise in flat products next month if China’s measures help in curtailing cheaper imports.
The steel ministry official said imports may still continue unabated, given the low cost of production in China. “China’s steps are welcome, but we have to do our bit to prevent market distortion. We are watching the situation,” he said.
