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Ambarish Mukherjee

New Delhi, Nov. 15 The tug of war between the primary and secondary steel manufacturers for Government protection has flared up again – this time on the issue of imposition of import duty on steel products.

The Cold Rolled Steel Manufacturers’ Association (Corsma), representing secondary steel producers, has written to the Finance Ministry urging it not to go ahead with the Steel Ministry’s recommendation of imposing a 10 per cent import duty on steel products.

The Steel Ministry has recommended the imposition of an import duty following representations made by primary steel manufacturers seeking protection against falling international prices and allegations that some CIS countries and China are dumping steel in India.

Falling international prices encourages secondary producers to import since it works out cheaper than domestic supplies.

Imposition of an import duty will make imports dearer and secondary manufacturers would be pushed towards buying from domestic primary producers who have piled up huge inventories.

Corsma had sent the letter to the Finance Ministry earlier this week following the Steel Ministry’s recommendations made to the Finance Ministry last week.

Pointing out that India is committed to retain duty rates at ASEAN levels, the communication from Corsma states that “protection to any industry should be provided only through statutory authorities which is the Anti-Dumping Directorate rather than distortion and dislocation of the entire customs duty structure”.

Falling prices and poor demand has forced all primary steel manufacturers to reduce prices and cut down production in the last few weeks.

However, despite production cuts prices continue to slide as the glut situation in the global market continues.

Domestic steel prices, which peaked in July to Rs 46,000 a tonne (excluding all central, State and local taxes), is now down to Rs 36,000 a tonne in November, while international prices are still lower.

Corsma, however, feels that reduction in global prices of steel and its raw materials augurs well for developing countries such as India since it will bring down costs of infrastructure and housing costs as well as for engineering and manufacturing.

Urging the Finance Ministry not to go ahead with the duty proposals, the Corsma letter states that the “Government should not interfere to block reduction in the prices of raw materials and steel to normal levels as availability of key inputs at fair prices is key to industrial growth”.

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