ASSOCHAM Seeks Increase In Import Duty On Steel (27-Jan-2012)
In pre-Budget memorandum to the ministries of finance and steel, ASSOCHAM Secretary General D.S. Rawat said that India should raise the duty on steel from the current 5% to 10% to protect the domestic iron and steel industry to keep the India growth story intact.
The ASSOCHAM secretary stated that there was a need to protect the domestic companies from dumping which came through China and the Commonwealth of Independent States (CIS) countries. He said that China and CIS countries possessed huge resources of coking coal and iron ore, making their products cheap. Any oversupply of steel products like hot rolled coils, cold rolled coils and other coated products was being dumped into growing markets like India.
India on the other hand, depended upon imports for its requirements. Further the coking coal prices in India had increased by more than 100% in the last one year and this had put additional burden on Indian steel manufacturers. (Nearly 50% of the steel manufacturing cost is on account of coking coal and 20% on iron ore). Faced by stiffer competition in terms of low prices, the Indian steel industry had reduced production and was running at lower capacity utilisation.
Justifying the cause further, Rawat said that it was common practice in the world for nations to protect their domestic producers by discouraging imports through imposition of a marginally higher import duty while encouraging exports by offering various incentives. China, for example, provided export incentives of nine% on steel products. After China, the United States and Europe, India ranked as the fourth largest steel producer with annual production capacity of 68 million tonnes. In the next two years, steelmaking capacity was set to expand by 15 to 20 million tonnes for meeting growth in demand of high-end consumer products like cars, refrigerators and washing machines. By 2020, the figure was likely to go up to 200 million tonnes. Rawat urged that raising import duty to a minimum of 10% would encourage the growth of domestic steel industry and ensure that India growth story is kept intact.
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