Indian steel producers push for higher import duties

Indian steel producers are lobbying for higher duties to be imposed on imports after the country became a net steel importer in April-December 2018.

Steel imports from Japan and South Korea are increasing quickly, while slower steel demand in China may increase inflows from that country in 2019, steel producers said at the India Steel 2019 conference in Mumbai.

India's steel imports fell by 3.1pc from a year earlier to 5.91mn t in April-December, the first nine months of India's 2018-19 financial year. But exports fell far more sharply, dropping by 38.5pc to 4.67mn t, according to government data. India was a net exporter of steel in 2017-18.

"India is facing a threat of more imports coming in from China and Turkey. The 25pc import duty imposed by the US is diverting supplies to India. On the other hand, Indian steel exports are largely price-uncompetitive in world markets," said Anil Kumar Chaudhary, chairman of state-owned producer Steel Authority of India (Sail).

"India's trade barriers are becoming ineffective for steel while more imports are coming from Japan and South Korea, which have free-trade agreements with India. Steel import volumes are becoming more and more," said Dilip Oomen, managing director of private-sector Essar Steel. "I urge the government to review safeguard duties as well as the contents of the FTAs with Japan and South Korea."

Flat products, which account for the biggest portion of imports to India, attract a 12.5pc basic customs duty, although this is not applicable on imports from Japan and Korea. But anti-dumping and safeguard duties that protect most flat steel products are also applied to these countries.

Steel producers are concerned about imports because flat products fetch the highest price in the domestic market and provide most of the profits for large, integrated mills.

India's steel consumption is expected to grow by 8pc in the 2018-19 financial year, while output growth will only be around 4-4.5pc. But another 12mn t/yr of steel capacity will be added in India in the next 18 months, which could create a supply glut unless imports are kept in check, said Seshagiri Rao, managing director of private-sector JSW Steel. India needs to introduce additional safeguard duties, he said.

Recently-introduced quality standards for several steel products made by domestic and overseas suppliers have not been properly enforced for imports, leading to inflows of sub-standard steel such as coated products from southeast Asia, Rao said.

"India's steel exports are subject to non-tariff barriers in many countries," said Naushad Ansari, joint managing director of private-sector Jindal Steel & Power, hinting that the Indian government could explore similar means of curbing imports. "Steel dumping is a big problem and the industry is quite wary of increased dumping."

But the Indian government is not too concerned. "Neither the steel industry nor the government are jittery about imports. I also do not think there is much demand for imported steel in India," said Birender Singh, India's steel minister. "There is no hurry to take any steps on increasing duties. If the situation worsens, we will see what to do."

"Imports into India are not alarming right now. But our tariff barriers are not very effective at current low global steel price levels," a steel ministry official said.