Steel safeguard duty: Govt to keep in mind user industries' concern

The government would ensure that the downstream user industry was not hurt by its final decision on the safeguard duty on select steel imports, said a senior finance ministry official.

"It is easy to impose duties, but we have to ensure that the user industry is not affected. We have to see if the injury to the steel industry is due to inefficiency or increased imports," he added.

On September 14, the government imposed a 20 per cent safeguard 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 recommendations of the Directorate General of Safeguards, which comes under the revenue department of the finance ministry.

The directorate is primarily concerned with the considerations of the interested parties, which in this case are steel producers like Steel Authority of India, JSW Steel and Essar Steel. It also can choose to seek opinion from the user industry. "We will take the view of the end user industry. But it is not necessary to consult other parties before emergency measures are imposed. You can take action based on the data you have," the official pointed. The Engineering Export Promotion Council has stated the 20 per cent safeguard duty will result in a 15 per cent rise in the prices of their products, rendering them uncompetitive. "At least 25 per cent of engineering exports will be affected," the council said in a note to the directorate.

The government is clear the duty is temporary. "It cannot be protection without any commitment from the steel industry. The overcapacity in the steel industry is almost 30 per cent," the official added.

Safeguard duties are allowed by the World Trade Organisation as a temporary measure to check damage to a country's industry from cheaper imports.

"The drop in China's economic growth rate has left it with an oversupply of commodities, including steel. Since it cannot be consumed within their country, they are exporting it to other countries," the official said. Steel prices fell from $600 a tonne in 2014 to $380 in May, resulting in the emergency measure, he added.

"On the basis of analysis of the application filed by the domestic industry and the injury parameters, it is observed that the domestic industry is suffering serious injury/threat of serious injury in respect of market share, profits/losses, inventory, decline in domestic selling prices," the directorate noted in its preliminary findings.

It also found the market share of imported steel had increased from 6 per cent in 2013-14 to 12 per cent in 2015-16.
SHIELD OF STEEL

• On September 14, the government imposed a 20 per cent safeguard 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 Engineering Export Promotion Council has stated the 20 per cent safeguard duty will result in a 15 per cent rise in the prices of their products, rendering them uncompetitive
• Safeguard duties are allowed by the World Trade Organisation as a temporary measure to check damage to a country's industry from cheaper imports
• The market share of imported steel had increased from 6 per cent in 2013-14 to 12 per cent in 2015-16, according to the preliminary findings of the Directorate General of Safeguards