India has imposed a hefty Minimum Import Price on steel products to shield the domestic industry. Speaking to Bloomberg TV India, JSW Joint Managing Director and Group CFO Seshagiri Rao explains the impact on the domestic industry, saying MIP has been imposed on 173 steel products out of the total 505 items.

However, 80 per cent of the line items of the imports, which are coming into India, are covered under minimum import price, he said. Excerpts:

What do you make of the impact of the minimum import price for your company, given the product split between long and flat products?

First we have to understand the industry and then the company.

According to HS Code Chapter 72, there are 505 line items for the steel industry.

Of these, there are 173 items on which the minimum import price has been imposed.

Out of the 505 items, if we take out primary articles of use like ferro alloys, hot briquetted iron (HBI) or any such articles, the number comes down to 343, of which there are 173 relevant to MIP.

Now, MIP is not applicable on tin plates, electrical steel grade items, stainless steel, long-product related items, spring steel and many more.

These items, which aggregate over 2 million tonne of imports. They have said, whatever export of steel is happening, they can import without applying MIP under advance authorisation scheme.

So, 3-4 million tonne of steel is exported from India, but it can import steel without subjecting it to MIP.

The second issue is that the X-52 grade and above, like those steel used for manufacturing of pipes for oil and natural gas transportation, can also be imported.

These are important features of this minimum import price. So, 80 per cent of line items of the imports coming into India, are covered under MIP .

In this context, if we look at a total of 80 million tonne of steel (consumed in India), 45 million tonne is related to long products and 35 million tonne is flat.

Looking at JSW Steel, when we say our capacity is 14.3 million tonne, 80 per cent is flat and 20 per cent is long. We will produce more of long products going forward, in the month of March.

The MIP doesn’t apply on scraps. In your opinion, can importers import scrap and then convert that to steel? Is that a viable option?

Primary articles can come into India. They are in the range of 6-7 million tonne and a significant portion of that is scrap, which is getting imported. Companies can import scrap and produce the steel. But we have to see how much steel can come in from that process.

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