India will aim to protect subsidies given to steel producers by various States such as Octroi refund, sales tax incentives and electricity duty exemption at the OECD steel committee meeting next week.
New Delhi, however, is likely to side with developed countries on measures to curb China’s excess capacities at the crucial meet in Paris which would focus on collective action to sort the problem of over production of steel, a government official said.
“The OECD steel committee meeting will try to build consensus on setting up a global forum that would take collective decisions to curb over capacity in the steel industry. While it would be difficult to put a cap on capacity, the committee might stress on removal of all subsidies. We need to be careful there as our States give different kinds of subsidies that need to be protected,” the official added.
The trade ministers’, in their joint statement, stated that excess capacity in steel and other industries was a global issue which required collective responses.
The statement also recognised that subsidies and other types of support from governments or government-sponsored institutions could cause market distortions and contribute to global excess capacity and therefore require attention.
“While we realise that China is the main target of the OECD countries as it is the largest producer of steel, we can’t be oblivious to the fact that any blanket curb on subsidies could affect the ones given by State governments to our industry,” the official said.
The Steel Ministry is in talks with the Commerce Ministry to finalise New Delhi’s strategy for the meeting on September 8-9 which will be attended by around 36 countries.
According to OECD figures, global steel capacity increased 126 per cent since 2000 to touch 2.3 billion tonne last year. Demand, however, took a hit in 2008 due to the effects of the financial crisis and dipped again in 2014 to 1.663 billion tonne, which was over 600 million tonne lower than the capacity. The capacity demand gap is expected to have widened to 700 million tonne in 2015 and further in 2016.
China, which is the largest producer of steel, accounts for half the steel production in the world. India is the third largest producer of the metal with a total capacity of 110 million tonne.
The 25 OECD countries, its four associates including Brazil and Russia, six participants including India and South Africa and invitee China together account for 95 per cent of global steel production and trade.