Import tariffs. Domestic steel mills seek curbs on Chinese imports; call for reciprocal benefits under FTAs

As India turned a net importer of steel in July, primarily on account of a fall in exports and the continued pressure of lower priced offerings, Indian mills have sought the Steel Ministry’s intervention to impose restrictions on offerings from China, while seeking reciprocal trade benefit clauses in FTAs with countries such as Japan and South Korea. 

India imported 5,87,000 tonnes of steel in July, as against exports of 5,13,000 tonnes in the month.  

In a letter to the Ministry (a copy of which is with businessline), one of the largest domestic steel makers has asked for temporary suspension of concessions on import tariff offered under the Preferential Trade Agreement -- Asia-Pacific Trade Agreement (APTA) -- covering iron and steel products. 

It has also argued that imports under the PLI scheme for steel and steel products should be discouraged; and the Basic Custom Duty should be raised to a minimum of 15 per cent (for all steel products under the PLI scheme). Concessional tariffs under all existing and ensuing FTAs under the PLI scheme need to be withdrawn. 

PLI items include coated and plated steel products, high-strength steel, specialty rails, alloy steel products and electrical steel that are used in sectors like automobile, defence and power.

The industry has also called for a CVD investigation against the Chinese steel industry.

“Channelise imports of all non-prime steels and steel products, along with all products not complying with the quality control order, through select ports to facilitate a thorough testing and inspection,” a steel exporter said, requesting anonymity. 

The China Factor 

Steel mills have argued that China is exporting at lower than its cost price. 

Back of the envelope calculations suggest that Chinese export prices in July (export-FOB of HR Coil) stood at $550/ tonne. Taking out local freight and clearing, handling charges and VAT, the mill price works out to $465 per tonne. 

As against an ex-mill price of $465/ tonne, the average median cost is $502/ tonne. “This means the export price of Chinese mills was below cost by $37/ tonne or 7 per cent lower than the production cost,” an exporter said. 

Further, China exports steel under FTA to various South-East Asian countries, which could get re-exported to India. Coming in through FTA countries, there is a duty arbitrage, too. 

Ultimately Chinese imports / shipments coming into India were priced at Rs 49,600-50,000/ tonne, as against domestic HRC prices of Rs 56,000/ tonne (11 per cent lower than Indian prices). 

Also read: India’s key steel export markets come under pressure in May 

Reciprocal clause in FTAs 

The industry has also called for Rules of Origin for all existing FTAs to be “revised to Melted and Poured” steel for products. 

“Indo-Japan and Indo-Korea FTAs to be made reciprocal in terms of steel trade,” the exporter said. In an earlier interview, Tata Steel’s TV Narendran had told businessline that from a steel industry point of view “we have not really helped ourselves” by agreeing to very low tariff levels, almost zero tariffs.  

There is also a call to disallow concessional import tariffs under existing and ensuing FTAs for non-prime steel. 

“There is a need to rectify prevailing duty disparities in the Indo-ASEAN trade agreement. The industry is also calling for the need to constitute and activate a dispute settlement nodal body for all existing and ensuing FTAs for the effective and timely resolution of differences, if any,” the exporter said. 

COMMENT NOW