The operating capacity of India's stainless steel industry has declined to 50% due to cheap imports from China and other Free Trade Agreement (FTA) countries.
The capacity has drastically come down in the last 6-7 months as imports from China, Taiwan and Korea have shot up by 150%.
According to industry body - Indian Stainless Steel Development Association (ISSDA), India's stainless steel imports have gone up to around 40% of the country's consumption of around 2.5 million tonne.
Until the last financial year, total imports from all countries combined was 100,000 tonne. But total imports from China alone have shot up to 250,000 tonne in the first half of the current financial year.
"Imported stainless steel constitutes around 40% of India's stainless steel consumption of which the Chinese share stands at 25%," said N C Mathur, president of ISSDA.
The stainless steel industry in India has invested heavily in the last year to the tune of around Rs 30,000 crore to build capacity of around 3.5 million tonne.
Jindal Stainless has invested around Rs 12,000 crore in its 1-million-tonne greenfield project in Odisha, which is currently operating at 30% of its operating capacity. Its Hisar facility is currently operating at 60-70% capacity.
Similarly, the Salem steel plant by the Steel Authority of India Ltd (SAIL) has invested heavily on capacity additions.
"When Prime Minister Narendra Modi is emphasising on 'Make in India', here is an industry which is bleeding due to imports despite having enough production capacity. We certainly need protection in terms of 'anti dumping duty'. The difference between raw material and finished products imports currently stands at 5% in India as against 10% in China.
"The Chinese government protects its local industry. We cannot import raw materials from China due to higher duty. So we have to import finished products at the expense of the local industry. We want similar duty protection to prevent units from closing down," said Mathur.
With crude stainless steel production at 3 million tonne, India ranks as the third largest producer and second largest consumer of stainless steel. The market for 2013-14 was at 2.5 million tonne of which flat products accounted for approx 2 million tonne. With a low per capita consumption of 2.1 kg (as against the world average of ~5 kgs) there lies a huge potential for future growth but slowdown in sectors such as infrastructure, railways, seaports, airports, highways, and bridges etc. have been major obstacles.
Indian Metals and Ferro Alloys (IMFA) managing director and President of International Chromium Development Association (ICDA) Subhrakant Panda said that the industry was hopeful that government's measures will trigger a recovery in the infrastructure sector.
"The problems have got compounded on account of humongous increase in imports coming in from China. Over the past 5 years, imports from China have gone up by close to 700%. Apart from dumping activities, large scale circumvention of import duties is also rampant. But, with new government promising to focus on growth of domestic manufacturing and on the infrastructure sector, we are hopeful that the demand for stainless steel should also get a boost," said Ratan Jindal, Chairman & Managing Director of O P Jindal Group while presenting the 2013-14 results.
The stainless steel industry is also struggling with raw material linkages due to overall de-allocation of coal mines.