Should import duty on steel be reduced?

Debate

 S C Mathur

 Executive Director,

 Cold-rolled Steel Manufacturers Association of India

 The availability of steel products at economic prices is vital for the global competitiveness of Indian industry and the reduction in its high project and infrastructure costs.

 The custom duties on steel products have a direct bearing on its availability, prices, the global competitiveness of downstream products, project costs and so on, and high duties have an adverse impact on economic growth.

 The current custom tariffs on steel products in India are very high. While in the US and the European Union steel imports are subject to a custom duty of 4 per cent, in most of the Asean and south Asian countries, the duty ranges from 4 to 10 per cent.

 China permits substantial duty-free imports of steel under the quota system, while for imports beyond the quota, the rate is 14 per cent. In India, even the imports of intermediate products like billets, hot-rolled (HR) coils and so on are subject to a basic custom duty of 25 per cent plus special additional duty (SAD) at a rate of 4 per cent. This adds up to 31 per cent. Thus, imports at economic prices are not feasible.

 Besides, taking advantage of the shortages and high custom duties, the prices of HR coils and other products for the domestic market are being fixed on the basis of costs and freight (C&F) cost of the imported materials plus 31 per cent custom duty. The prices are, thus, higher by over 35 per cent or Rs 5,000 a tonne vis-