Engineering exporters seek parity in domestic steel, export prices

Amiti Sen New Delhi | Updated on January 04, 2018

Take up issue with Commerce Ministry

Engineering goods exporters have sought the government’s intervention to ensure uniformity in domestic prices of steel and export prices alleging that some domestic producers of alloy were exporting at prices which were about a fourth lower than what they were offering at home.

“We have raised the issue with the Commerce Ministry and have pointed out that the lower export prices of steel was giving our competitors in countries such as Vietnam and Cambodia a competitive edge which is unfair,” EEPC India Chairman Ravi P Sehgal told BusinessLine. Commerce Ministry officials have, however, asked the complainants to come up with more numbers to establish their case. “We have started the preliminary work to get enough numbers to establish our point. We will be getting data from various ports and make comparisons,” Sehgal said.

After being at the receiving end of cheap imports from countries such as China and Japan, Indian steel producers such as SAIL, JSW Steel and Tata Steel managed to give their exports a thrust this year. For the first time in three years, Indian steel producers' exports outstripped steel imports in March 2017 owing to factors such as a fall in Chinese exports and the imposition of a Minimum Import Price (MIP) by the government to check cheap imports. Domestic steel users, however, still remain the main market for Indian steel producers accounting for the giant share of total sale.

Manufacturers unhappy

The increase in exports has, however, made some of the Indian engineering goods manufacturers unhappy as they contend that the cheap prices offered by certain Indian exporters to stay competitive globally should also be offered to domestic players. “There is a 20-25 per cent difference in the price of steel in the domestic market and the price at which the manufacturers export to countries like Vietnam. If the domestic engineering industry is given the raw material at the same prices, our competitiveness will go up several fold,” he said. Engineering goods exports have witnessed a turnaround this year, thanks to revival in the American and the EU markets. Lower raw material price could increase this further. Sehgal said it would not be difficult for the Centre to ensure parity in domestic and export prices. “The Commerce Ministry will have to work with the Steel Ministry for regulating domestic steel prices and it would not be difficult once the differential pricing is established. Total export of steel, anyway, is just a small percentage of total production,” he said.

Steel manufacturers the world over are struggling with over-capacity and countries are exchanging pledges to eliminate their excess capacities. India has been managing to keep cheap imports at bay and protect the domestic industry through various trade remedial measures by putting in place MIPs and imposing anti-dumping duties.

Published on December 31, 2017

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