News

FIMI proposes regulating domestic steel prices

Our Bureau New Delhi | Updated on August 31, 2020

Alleges steep price rise resulting in windfall gains for few steel companies at the cost of the entire Indian economy

The Federation of Indian Mineral Industries (FIMI) has red-flagged the steep increase in domestic steel prices in recent months and plans to hike it further. A FIMI statement said that this is leading to windfall gains for a few steel companies at the cost of the entire Indian economy, including upstream mining industry and downstream user industries.

In a letter to Prime Minister Narendra Modi, FIMI said, “Subsequent to auctions, the integrated steel players have now got their own iron-ore mining leases post-March 31, 2020. Having secured sufficient raw material for their own steel plants, they are now taking the plea of high international iron-ore prices to hike steel prices in India, while they are not dependent on international iron-ore for making steel.”

“This is despite the fact that 162 million tonnes of iron-ore, mainly having more than 58 per cent to 62 per cent iron, has been lying unused in the country for decades due to non-lifting of such ore by the steel industry,” FIMI said.

While the steel industry advocates and uses trade barriers (export duty on iron-ore) to squeeze the mining industry, it advocates a free market for domestic sale of steel at par with international prices. Consequently, the high price of steel in India has deprived domestic consumers of common use of steel and is the prime reason for the low per capita consumption of steel in India at 74 kilograms compared to 208 kg globally, FIMI said.

All these protectionist measures have helped a few steel players make windfall profits, while artificially hiking costs for downstream industries and consumers, thereby leading to subdued demand and stunted economic growth. The artificially-inflated steel price has also led to higher cost of infrastructure and construction projects, both in the private and public sectors, FIMI added.

According to FIMI, the high price of steel in India has deprived many downstream products of their competitive edge in the international market.

Published on August 31, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like