Local companies in a fix as steel imports surge
Shipments at zero duty from FTA countries have shot up by 67% in April-July 2019 against a 58% increase in the same period last year (April-July 2018).
The increase comes at a time when overall steel imports showed a decline of 6.5% in July 2019. India now has FTA with 13 countries, but recent talks under the proposed Regional Comprehensive Economic Partnership (RCEP) — a 16-country pact that would include China — has raised the likelihood of higher steel imports at zero duty.
Shipments at zero duty from FTA countries have shot up by 67% in April-July 2019, according to the latest available industry data, against a 58% increase in the same period last year (April-July 2018).
Imports climbed from 586,000 tonnes in April to 856,000 tonnes at the end of August. Of this, in August alone, FTA imports climbed 0.8% even as shipments from non-FTA countries attracting 7.5% duty have declined.
“The real threat appears to be imports at zero duty from FTA countries,” said Seshagiri Rao, joint MD, JSW Steel.
Steelmakers are getting increasingly apprehensive about the presence of China in the proposed RCEP. The platform includes 10 Asean member countries --Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam and their six FTA partners--- India, China, Japan, South Korea, Australia and New Zealand.
Commerce minister Piyush Goyal has held sectorspecific meetings in light of the upcoming RCEP negotiations. Steelmakers have been demanding that steel products be kept out of the purview of the RCEP.
In particular, domestic steel players have raised concerns over significant reduction in customs duties under the proposed pact.
The steel sector, already reeling under the threat of imports, is anxious that a trade deal may lead to dumping of goods by China, with whom India had a $53-billion trade deficit in 2018-19.
The steel industry believes it will be further exposed to unfair competition since countries such as Japan and Korea already get the advantage of zero duty when they export to India under the FTA.