India, US unable to resolve tariff issue as Steel Ministry refuses quota restrictions

Twesh Mishra Amiti Sen New Delhi | Updated on December 26, 2018 Published on December 26, 2018

US President Donald Trump signs a presidential proclamation placing tariffs on aluminum imports and steel imports while surrounded by workers from the steel and aluminum industries at the White House in Washington, US, on March 8, 2018   -  REUTERS

A counter levy of import quotas by the European Union too hits Indian steel industry

The Steel Ministry has refused to accept any quantitative restrictions on export of steel and aluminium to the US making it difficult for the Commerce Ministry to convince Washington to withdraw the penal duties imposed on the metals earlier this year, a government official said.

India’s export of steel to the US has already started taking a hit, although export of aluminium is stable, according to government calculations.

“The US is not willing to consider any option other than the quantitative restrictions on imports at levels suggested by it. The Steel Ministry, on the other hand, is refusing to accept any such restrictions. The Commerce Ministry is, therefore, in a difficult spot as imposing retaliatory duties against the US may have diplomatic implications,” a government official told BusinessLine.

Last week, India deferred its decision to implement retaliatory duties against the US for the fourth time. The duties, worth an estimated $235 million, are to be imposed for ‘wrongful imposition’ of penal tariffs of 25 per cent and 10 per cent respectively on Indian steel and aluminium. The US had imposed the tariffs on a bunch of countries including India, Japan, China, South Korea, Mexico and the EU members, in March, citing security concerns.

The Indian steel industry has also been hit due to a counter levy of import quotas by the European Union. “There is a noticeable glut in the international market which has led to cross dumping of finished products into the country predominantly from South Asian countries and China. The supplies earlier targeted to the European Union are now getting diverted to other markets including India,” a steel industry association representative said.

Chinese steel

Chinese companies have set up manufacturing facilities in Indonesia and Vietnam, a representative from another steel association pointed out. “India has free trade agreements with many Asian countries and Chinese steel is being routed through these countries. We have already reported this to the government,” another steel association representative said.

The new date for imposing the retaliatory duties against the US by India is now January 31, but with US Commerce Secretary Wilbur Ross’ scheduled to visit India in February for the US-India Commercial Dialogue, it seems unlikely that New Delhi will go ahead with the duties.

“India does not want to sour its diplomatic relationship with the US. But the notification on retaliatory duties cannot be deferred continuously. A decision on either imposing the duties or withdrawing the notification may have to be taken soon,” the official said.

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Published on December 26, 2018
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