China threat: PSUs may have to buy 35% of steel from domestic firms

To protect steel companies from the onslaught of cheap Chinese imports, the Centre plans to make it compulsory for all public sector undertakings (PSUs) to procure at least 35 per cent of their steel from local manufacturers.

Minister for Heavy Industries Anant Geete, in an interview to BusinessLine , said his Ministry was considering making it compulsory for major government companies such as NTPC, ONGC, and BHEL to procure steel from domestic steel manufacturers.

These companies have a huge requirement of steel. Therefore, we will make it compulsory for PSUs to buy steel from local companies. It will provide some relief to the local industry,” the Minister said.

According to data tabled in the Lok Sabha, India imported 1.703 million tonnes of steel (alloy and non-alloy) from China between April and October 2014, which is a 133 per cent jump over the previous year’s import of 0.731 million tonnes (April and October of 2013).

The Minister said the domestic steel industry is in deep trouble due to heavy imports from China. Other countries have taken protective measures, such as increasing anti-dumping duty on steel. Only the Indian and Gulf markets are open to the Chinese steel makers.

“In this competitive environment, the Indian steel industry cannot stand up to this (Chinese) challenge. Therefore, I will soon be meeting Finance Minister Arun Jaitley along with a delegation from the steel and seamless pipes industry for increasing the anti-dumping duty and compulsory buying of steel by PSUs from Indian companies,” Geete said.

He said that last time when anti-dumping duty was levied on Chinese steel, companies there had further dropped prices. Chinese steel companies get about 15 per cent export subsidy from their government, but the Indian government can provide only 2 per cent subsidy. Therefore, there is a need for a long-term policy.

“It would be brought to the Finance Minister’s notice that the imports are not only hurting Indian steel companies but also workers who are associated with the industry. Today, Indian steel production has slumped to 50 per cent of the installed capacity,” he said.

The Minister also added that imported steel in huge quantities is dumped without any attention to quality. All PSUs are complaining about the quality of steel.

“Therefore soon, we will have to take some policy measures on this front also,” Geete said.

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