Government has not come across any demand from domestic steel makers for removing steel from the purview of free trade agreements (FTAs) with Japan and South Korea or imposing ban on imports from the two countries, Parliament was informed on Monday.

“No,” Commerce and Industry Ministry Anand Sharma informed the Lok Sabha in a written reply.

He was replying to a question whether indigenous steel makers have demanded the removal of countries like Japan, South Korea and China from the list of preferential Free Trade Agreement countries or for the imposition of ban on import of steel from these countries.

The minister’s answer is in contrast to demands made by leading steel makers like JSW Steel and Essar Steel.

The two steel majors have sought removal of steel from the purview of FTAs with Japan and South Korea, while voicing concern on rising imports from the two Asian economic powers.

“Japan and Korea are pushing for more steel into India. There is more than 300 per cent increase in imports of steel in just one year from these countries. So, the government needs to sit back and take a look at this. Steel should be outside of the purview of FTA,” JSW Steel’s Chairman Sajjan Jindal had said in September.

Steel Minister Beni Prasad Verma had also rejected their demand earlier and had said, “I don’t know what the industry is clamouring for. They have to understand that when import duty would be near zero by 2025, they have to compete“.

According to the Joint Plant Committee of the Steel Ministry, imports went up to 4.25 million tonne (MT) during April-October period of the current fiscal as against 3.27 MT in the same period of last year, a growth of 30 per cent.

In 2011-12, India’s total steel import stood at 6.83 MT. In January, 2010, India had signed FTA with South Korea and with Japan in August last year. Under FTA, duties on most of the products, traded between the countries, are either eliminated or reduced sharply.

After FTA came into existence, import duty on Korean and Japanese steel products were reduced to 3.13 per cent from five per cent in 2010. Imports from other geographies attract 7.5 per cent import duty.

Cashing in on duty benefits, Japan and South Korea have also become leading exporters of steel to India replacing the traditional exporters European Union and Russia.

According to a Commerce Ministry data, Japan and South Korea together sold steel products worth $2.873 billion in 2011-12 to Indian consumers.

During the first half of the current fiscal, steel imports from the two countries were worth $1.653 billion.

As per the data, China has been the largest exporter of steel products to India, amounting over 25 per cent of total Indian imports at $2.738 billion in 2011-12. During the April-September period of the current fiscal, imports from China had been at $1.198 billion.

(This article was published on November 26, 2012)
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