Posted on 17 Nov 2015
'Safeguard duty on steel counterproductive'
Multi-national companies with interest in India
such as Posco, Maruti Suzuki, Hyundai and ArcelorMittal Brasil along
with Indian industry on Monday made a strong pitch against the
imposition of safeguard duty on steel. They argued the move would be
counterproductive to the government's Make in India campaign and that it
would impact foreign investments coming to India.
The public hearing called by the Director General of Safeguards (DG
Safeguards) on Monday also saw participation from country delegations
and embassy representatives. These included the European Union, Japan,
China, the Ukraine, the Russian Federation, Taiwan and Brazil. India has
a free trade pact with South Korea and Japan, under which the countries
enjoy substantial duty benefits on steel imports. Posco and Hyundai
argued the steel imported from South Korea is for captive use and not
for domestic sale that could have an impact on the domestic steel
companies.
Posco contended it was forced to import from its parent company in South
Korea as the local plants in India declined to supply steel products
due to their own inability to produce the required quality and quantity.
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Posco alone imported nearly 950,000 million
tonnes of hot-rolled steel between May 2014 and September 2014,
accounting for 30 per cent of total imports of the raw material. If
excluded from the total steel imports, there is no surge in steel
imports, it argued.
In all, there were 29 presentations from Nippon Steel, Posco
Maharashtra, Posco Korea, Mitsui, Hyundai Steel, Hyundai Motors, China
iron and Steel Association, Federation of Industries of India,
Federation of Association of Maharashtra, RKB global and Tube Products
of India, among others.
DG Safeguards, Vinay Chhabra, asked interested parties to make written
submissions by November 23. The government will take a final decision on
the duty by February after hearing all interested parties. In
September, the government imposed a 20 per cent safeguards duty for 200
days on the import of hot-rolled flat products of non-alloy and other
alloy steel, in coils of a width of 600 mm or more. The decision was
taken on the basis of preliminary findings and the recommendations of
the DG Safeguards, which comes under the revenue department of the
finance ministry.
Nippon Steel argued the steel required for auto production should be
exempt from safeguard duty as the domestic industry does not have the
capability or the technology required for production.
Tata Steel, Jindal Steel and Bhushan Steel
supported the three petitioners - JSW Steel, Essar Steel and the Steel
Authority of India.
"Hot-rolled coil is consumed as a basic raw material by many downstream
engineering units in the country. Hence, the levy contradicted the
government's initiatives like 'Make in India', ease of doing business
and Sabka Saath, Sabka Vikas," H L Bhardwaj, secretary-general of
Federation of Industries of India, argued in his presentation. He added
the imports made before the safeguard duty notification but delivered
later must be exempt from the levy.
The Federation of Association of Maharashtra noted the petitioners in the case, such as JSW and SAIL, have made profits.
Safeguard duty is allowed under World Trade Organization rules as a
temporary measure for a specified period to check damage to a country's
domestic industry from cheaper import. The market share of steel imports
doubled from six per cent to 12 per cent in absolute terms between
2013-14 and 2015-16, preliminary findings showed.
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Japan, South Korea and China accounted for about
half the iron and steel imports into India in the first six months of
the financial year, worth about $3 billion. Imports made up five per
cent of the country's total production of the under-investigation steel
products (hot-rolled coil) in the year to end-March 31, 2014.
