Increase the import duty on stainless steel flat products: K K Pahuja

One of the main reasons for this is huge import surge, especially from China, which has primarily contributed to the deteriorating condition of the SS industry. Imports of stainless steel flat products rose from 3, 24,460 MT in 2013-14 to the highest ever record of 5, 32,033 MT in 2015-16. Imports from China have more than doubled from 1, 11,765 MT in 2013-14 to 2, 76,456 MT in 2015-16, according to Ministry of Commerce. China now accounts for more than 50 percent of the import basket. This is the single largest threat for the industry today.

This trend of surging imports continues even this financial year. The situation has reached alarming proportions and has further deteriorated in the first five months of the FY 2016-17 (April – Aug 2016). The total imports of stainless steel flat products touched all time high of monthly volume of 73,749 MT in Aug 2016.

Even in comparison to other steel products, SS flat products attract the lowest basic customs duty at 7.5 percent while the duty on carbon steel products is 12.5 percent (due to two instalments of duty increase in 2015 of 2.5 percent each). Further, when there was a sharp rise in imports in the steel industry, imposition of a Minimum Import Price (MIP) was notified in February 2016 to help the domestic steel industry. The stainless steel products were left out once again thus depriving the domestic stainless steel industry from any protection even if it was meant to be in the short term.

Considering the fact that today imports occupy 25 percent market share, there is an immediate need for increasing the import duty on stainless steel flat products.

In the past, Government of India (GOI) has acknowledged the issue of dumped imports into the country and has levied anti-dumping duties (ADD) on certain product segments. However, these duties have proven to be largely ineffective because of widespread circumvention of ADD. Therefore, the existing anti-dumping duties are more in the nature of token measures and do not provide any measure of effective protection. In reality they offer no protection to the domestic industry which continues to reel under the pressures of swelling imports.

Excess capacity & surplus production in China and duty disparity are two main factors for import surge from the neighbouring country. 

From being a net importer of SS in 2009, today China is the world’s biggest exporter of stainless steel. There is huge surplus production of SS in China which is being diverted to growing markets like India. 

China’s fiscal policy combines high rates of import duty on finished goods with virtually nil duties on raw materials. This ensures that Chinese stainless steel manufacturers simultaneously enjoy the benefits of cost advantage on inputs and tariff protection from imports on output (Table 1). This policy of providing dual protection to the local SS industry has completely skewed the rules of competition in favour of the Chinese manufacturers.  

Even other countries like Brazil, Indonesia, Thailand and Vietnam have higher duties on SS flat products. For example, Brazil has 14 percent import. Added to this, China also imposes export duty on critical stainless steel raw materials as shown in Table 2. 

These export duties have the effect of discouraging exports of raw materials from China resulting in artificially lowered prices in Chinese markets and have impact on cost and price of finished goods.

Considering the above, stainless steel industry would request for a level playing field for the domestic SS producers and therefore suggest the following:

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K K Pahuja is the president of Indian Stainless Steel Development Association (ISSDA)