Indian steel mills raise red flag over rising imports

Indian Steel Association — an industry body of India’s steel makers including SAIL, Tata Steel, JSW, JSPL and others — has flagged the issue of rising imports, especially from countries like Japan and Korea, impacting steel price and demand both within the country and across key export markets. 

Imports during the April to December period increased 40 per cent, while exports declined 60 per cent. Imports from free-trade agreement or FTA countries increased 30 per cent during this period to 2.9 million tonnes.

In a January dated letter addressed to the PMO, with copies marked to the Ministry of Steel, Department of Commerce, and Department of Revenue, the association pointed out the issue of “one-sided FTAs offering access to the growing Indian steel market at 0 per cent custom duty”. 

While, on the other hand, reciprocal exports to Japan and Korea remained “almost negligible”. The cumulative trade deficit for Japan and Korea recorded a sustained increase, at an 11-year CAGR of 28 per cent, to $34 billion in FY22, up from $11 billion in FY14. In FY11, when some of these FTAs came up, the trade deficit was $2 billion.

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The trade deficit increased to $14 billion in FY15, $17 billion in FY16, and so on. Even during the Covid years, the deficit had increased — from $26 billion in FY19 to $29 billion and $31 billion for FY20 and FY21, respectively. 

In volume terms, the trade deficit saw 30 per cent CAGR to 42 million tonnes (mt) in FY22, as against 2 mt in FY11.

‘Worrisome FTAs’

Incidentally, a ministry report accessed by businessline shows Korea, Japan, China, Russia and Taiwan among the top exporters to India. Steel imports from Korea stood at 39 per cent of total imports, as per last available data for the April to December FY23 period. 

“FTA with ASEAN has remained a cause of concern in terms of disparity of duty concession offered by India — that is, India offered zero per cent import duty for all tariff lines unlike ASEAN offering the same only for limited tariff lines,” the letter mentioned. 

The letter further says that during Q3FY23 (October to December), imports surged 101 per cent to 2.3 mt, displacing 8 per cent of domestic steel demand.

Predatory pricing and dumping

India remains a net importer of steel between October and January (imports exceed export), as per Steel Ministry data. 

Zero custom duty on shipments from some of these countries has also led to predatory pricing and  dumping of offerings on India, it has been pointed out. 

The Indian Steel Association has also pointed to the various “conventional and unconventional” trade defence measures undertaken globally. For instance, the US has a 25 per cent ad valorem on steel products coming in, citing national security; the EU-27 and the UK have safeguard measures on offerings coming in from India and so on. 

The association wants the Centre to enforce safeguard measures on a suo motu basis, explore the reinstatement of anti-dumping duties on hot-rolled coils and plates, cold-rolled coils, and so on, increase the basic customs duty to 12.5 per cent for all steel products, and put in place quality control orders. 

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