Posted on 23 Jul 2015
The government had recently hiked the import duty on flat steel products, which are used in white goods such as automobiles, refrigerators and washing machines, to 10 per cent from 7.5 per cent and similarly for long products used in construction to 7.5 per cent from 5 per cent.
Aluminium manufacturers such as Nalco and Vedanta have been seeking a doubling of aluminium duty from the current 5 per cent, though officials are inclined to consider a 2.5 per cent increase in duty on imports.
Some 1.5-2 million tonnes of aluminium are being brought into the country from abroad, annually.
Indian steel makers have been complaining that overproduction in China, along with lower demand in Europe and Asia, have paved the way for cheap imports.
Hikes in duty have been unable to deter Chinese, Japanese, Korean and even Ukrainian steel makers from selling various kinds of flat and bar rods to India as there exists a $15-20 a tonne difference between various grades of imported and locally made varieties.
Indian steel firms owe banks nearly Rs 3 lakh crore in debt, and lower output forced by cheaper imports or losses would mean some of this debt could turn into bad loans.
At the same time, it would also adversely affect India's plans to ramp up steel production from a current 88 million tonnes to 300mt over the next 10 years.
Last year, there was a 70 per cent surge in imports, putting local steel firms' balance sheets under pressure.
Morgan Stanley estimates that the 2.5 per cent duty hike could potentially boost earnings per share of Tata Steel by 14 per cent next year, of SAIL by 33 per cent and of JSW Steel by 30 per cent.
Officials said one way out was to impose safeguard duties to prevent foreigners from skirting the duty hike by exporting out of countries with which India has free trade pacts. India has FTAs with Japan, South Korea and Asean.
Earlier this year, India imposed an anti-dumping duty of up to $316 per tonne on the import of certain steel products from three countries, including China.
Import data
Stainless steel imports have surged 49 per cent to 5.5 lakh tonnes in the last financial year, Parliament was informed today.
India, the world's third-largest steel producer, had imported 3.7 lakh tonnes of stainless steel in 2013-14, showed data presented by minister of state for steel Vishnu Deo Sai in the Rajya Sabha.
