Notwithstanding the “Make in India” push of the government, more than 50 per cent of the steel imported into India is duty-free from countries such as Korea, Japan, and other Asian countries under the free trade agreement.
India turned a net importer late last year, and imports surged to 8.89 lakh tonne in last December from 3.43 lakh tonnes in April 2022, a jump of 159 per cent.
Of the overall imports, 58 per cent of the imports are at zero per cent duty from countries such as Korea, Japan, and other Asian countries.
The duty-free import comes even though Indian steel companies had accumulated huge inventories due to a slowdown in domestic demand and an export duty of 15 per cent levied last May. Despite the withdrawal of export duties last November, steel companies could benefit as export contracts are signed one month in advance.
‘No reason to import’
Seshagiri Rao, Joint Managing Director, JSW Steel, said, “There is absolutely no reason for Indian automobile companies to import from their overseas parent company as indigenisation is up to 99.99 per cent as far as steel is concerned, and there is hardly anything in the auto sector that Indian steel companies cannot produce.”
JSW Steel itself has invested about ₹9,000 crore to ₹10,000 crore in auto-grade steel capacity and got the technology from JFE. There is no need for Indian companies to import steel from Japan or Korea, he added.
Asked whether automobile companies are getting steel at 7.5 per cent less from their parent company by excluding the import duty, Rao said that is not true as the parent company will include the import duty in the base price while shipping it to India.
If they are selling it for less than the market price, then it will be considered “dumping” and a separate investigation will be launched, he said.
‘Not much impact’
Import is a matter of serious concern, and the government has reduced import duty from 12.5 to 7.5 per cent. Even if the customs duty is increased, it will not have much impact as shipments are coming duty-free, said Rao.
Every country is protecting its industry by imposing trade barriers, with the US calling it an inflation reduction measure and Europe referring to it as a carbon border adjustment tax.
With the recession looming large in most countries, steel companies globally are looking for a market to keep their factories running.
Every country has a quick redressal mechanism when it comes to resolving an injury to the industry, and there is an urgent need for India to adopt it, said Rao.