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The Federation of Industries of India (FII), which represents 500 small and medium steel coil user units, has sought exemption from 20 per cent safeguard duty on import of thin gauge hot rolled coils.
“The industry is severely hit by the 20 per cent safeguard duty imposed by the Union government on the import of HR coils of any thickness from September 14. Though this is a provisional duty and only for 200 days, it has affected the viability of the small and medium steel industry players, who import thin gauge (below 2 mm thickness) coils,” said HL Bhardwaj, Secretary General of FII.
Closures feared The industry body apprehends closures and NPAs from the sector in the near future.
Industry insiders said domestic HR coil producers hardly market thin gauge coils. Owner of a converter or re-roller unit (HR coils into cold rolled coils) said that for small units, besides cost, availability of thin gauge HR coils is a serious issue.
“SAIL does not produce coils with thickness of 2 mm or below. Tata Steel produces limited quantity of 1.6, 1.8 and 2 mm. Though JSW Steel produces a variety of such products, it sells them to its long-term customers. So the restricted availability of thin HR coils in the domestic market prompts imports,” he said.
Bhardwaj said the converts or re-rollers import about 2.5 million to 3 million tonnes of HR coils a year of various thicknesses. Tube makers import about 1 million tonne a year. Auto component makers and cycle manufacturers also import HR coils.
Price range The current international price of HR coils of lower thickness is around $310 a tonne, which translates into ₹26,700 a tonne after charging basic custom duty of 12.5 per cent and 20 per cent safeguard duty.
In comparison, domestic prices of thin HR coils at present range between ₹26,000 and ₹27,000 a tonne.
Sources said the industry could not represent their case after Director General of Customs and Central Excise (Safeguards) on September 7 issued notice of initiation of a safeguard investigation. Though the notice said, “All interested parties may make their views known within a period of 30 days from the date of this notice..”, the duty was imposed on September 14.
Importers in a fix FII’s points of view hardly got a chance for consideration. The sudden imposition also caught some units, which had moved for import contracts in July or August and even had begun the process of shipment in early September, on the wrong foot, FII official said.
It also gave unfair advantages to some players with advance licences to buy the commodity on high sea, FII Secretary General added.
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