Safeguard duty on steel import extended

WIll be effective till March 2018 on select products; move aimed at protecting local producers from cheaper Chinese import

The central government has extended the safeguard duty on some steel imports till March 2018, to protect domestic industry from cheaper supplies from China, amid a global glut. However, the duty would be reduced to 10 per cent in stages over the next two years.

In September last year, India had imposed a 20 per cent safeguard duty on ‘hot-rolled flat products of non-alloy and other alloy steel coils of a width of 600 mm or more’.

Major steel companies have also asked for an anti-dumping duty, as well as countervailing duty on various products in this category.

On March 15, the Directorate General of Safeguards said the duty should be extended for two and a half years as increased imports were threatening the domestic producers. In a notification dated Tuesday, the Central Board of Excise and Customs (CBEC) said the 20 per cent safeguard duty would be extended till September 13.

The duty would be reduced gradually — it would be 18 per cent for the period between September 14, 2016 to March 13, 2017; 15 per cent between March 14, 2017 and September 13, 2017; and 10 per cent between September 14, 2017 and March 13, 2018.

“The extension vindicates what the domestic industry has been talking about. Considering the extent of injury because of dumping, whatever margins have been imposed based on the prices prevailing during the investigation period might not be adequate. So, it is a welcome step by the government,” said Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel.

In January, the government had imposed a minimum import price (MIP) for six months on as many as 173 products to protect domestic players from cheap imports. If required, the government may extend it beyond six months. Moreover, the steel ministry is working with the finance ministry to issue a financial package within two months for revival of the sector. “The steel industry has been seeking long-term measures to contain a huge influx of imported steel. The final findings and extension of safeguard duty till March 2018 is a right step and we welcome this move,” said H Shivaramkrishnan, chief commercial officer, Essar Steel India.

According to the steel ministry, imports came down by 25 per cent in the first 11 months of the current financial year. In 2014-15, steel imports were of 9.32 million tonnes (mt). This year, the imports would be around seven mt.

Safeguard duty is allowed under World Trade Organization rules as a temporary measure, for a specified period, to protect a country’s domestic industry from cheaper import.

A HISTORY OF PROTECTION

• June 2015: India imposed anti-dumping duty of up to $316 a tonne on some steel products from three countries, including China
• September 2015: The government imposed 20 per cent safeguard duty on steel products of this category, which has been extended till March 2018 in a notification passed on March 29, 2016
• February 2016: Minimum import price imposed for six months on 173 steel products
• March 2016: 5 major steel companies ask that anti-dumping and countervailing duty be imposed on some products
• In another major step, the steel ministry is working with the finance ministry to issue a financial package within two months to revive the sector