Posted on 13 Aug 2015
The Indian government needs to create a level playing field for the Indian industry and ensure that it is not unfairly harmed by low priced subsidised imports.
Addressing shareholders at Tata Steel’s 108th annual general meeting, Chairman Cyrus Mistry said India had the potential to be the manufacturing hub of the world including in steel “but unless the issues are addressed, it is unlikely to see an increased capital investment in the steel sector.’’
While asking the government to provide a level playing field, Mr.Mistry said: “low price steel imports are the biggest threat to the viability of the steel industry in India and the U.K. This surge in exports has distorted the pricing structure of steel globally and adversely impacted the long term economic competitiveness of steel companies. “This will ultimately impact the profitability, employment and prospects of new capital investments in the steel sector especially in emerging markets,” he added.
Over the last decade, China has built steel-making capacity of around one billion tonne per annum and the current capacity utilisation is around 70 per cent. This has resulted in around 300 tonnes of excess capacity in China and the slowdown there in the last two years has resulted in higher exports to the rest of the world. While it exported around 100 million tonnes in 2014, already in 2015, it is around 25 per cent higher.
A sharp depreciation of currencies in Russia and Japan have improved their competitive position via exports. “In fact, currently India is faced with around one million tonne of imports per month while imports into the U.K. are of around 0.6 million tonnes per month and into the euro zone of around 2.7 million tonnes per month,” Mr. Mistry said, adding “this is significant as it impacts domestic producers and affects long term viability of the steel sector.”
He pointed out that the last twelve months had seen several macro developments globally that could have a deep and long-term impact on the global economy. “Steel industry is the foundation industry of any economy, especially developing countries where material intensity is likely to increase significantly in the future,” he added.
