The Hindu Business Line : Engg industries want norms on steel scrap import changed

THE engineering industries in Coimbatore region have expressed the fear that the tightening of the norms of import of metal scraps, in the wake of the scare created over the recovery of armaments and shells from imported scrap from certain regions, would not only push up the transaction costs but also create a logistical nightmare at the handling points.

The industries are also not in a position to ensure only specific types of metal scraps are imported since these products are handled by trading companies located abroad.

According to Mr C.R. Swaminathan, President, the Southern India Engineering Manufacturers' Association (Siema), nearly 35-40 per cent of the requirements of the iron and steel industry are met through import of steel scrap. The price of steel scrap had gone up in the last 14 months by almost 120 per cent. But with the user industries, particularly automobile sector, witnessing a robust growth, the demand for castings had gone up that in turn pushed up the demand for steel scrap. The DGFT, in the wake of the furore over the recovery of some armaments and shells from the steel scrap imported from certain war-zones, had issued a circular restricting the type of scrap that could be imported — shredded and compacted form only and that steel scrap in other forms could be imported only through the major ports and the Inland Container Depot (ICD) at New Delhi.

In a letter to the Union Finance Minister Mr P. Chidambaram, the Siema President pointed out that the Finance Ministry had stated in a release that `only compacted and shredded scraps' of certain types should be allowed and un-compacted loose metallic scrap should not be allowed through any major port or ICD `as it will not be possible for the customs officials to detect explosives in heavy consignments of metallic scraps.'

The Finance Ministry also mentioned that it had sought assistance of forensic experts at major locations who are `experts in handling explosives and radioactive materials.' It further stated that `customs authorities are also being advised to call a meeting of importers of such scrap in the Ports/ICDs in their jurisdiction and to advise them to approach the jurisdictional police authorities to provide assistance of forensic experts and bomb disposal squads which can segregate the explosive materials from the normal cargo and defuse the same.'

But the ministry added a caveat stating that `the trade, however, will have to pay the normal fee for such assistance to police authorities.'

Mr Swaminathan said that following such a procedure would only add to the transaction costs, apart from creating a `chaotic and panic situation' at all the major ports and the supply lines would get choked. He said for the foundry industry producing critical parts, shredded scrap would have major quality implications as they could not segregate mix-ups. Some scrap varieties like very heavy melting scrap of 8 mm and 10 mm thickness could not be compacted. He suggested that to tide over the present impasse, the Government without any restrictions allow import of metal scrap from areas/countries not dealing with any war/conflict.

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