German conglomerate ThyssenKrupp believes that slapping anti-dumping duty on import of silicon steel, a raw material used for making specialised electrical steel, can impact the engineering giant's expansion plans in the country.
The company has in last two years invested around Rs 350 crore in India to set up an elevator making facility in Pune and aerospace unit in Bengaluru. It also plans to invest up to Rs 200 crore to expand its steel making unit in Nasik, Maharashtra.
The issue relates to steel companies filing petition for anti-dumping duty on import of hot rolled steel coils (HRC) from China, Japan, South Korea, Brazil, Indonesia and Russia. The petition also covers silicon steel.
In August, India imposed provisional anti-dumping duty on HRC steel from these six nations, that ends in February 2017. Now investigations are on to analyse whether the duty can be slapped for five years.
"The duty imposition will help no one, but it will impact our ability to produce high-end specialised steel. We are committed to the government's Make in India programme and want to bring the best technologies here," ThyssenKrupp India CEO and Managing Director Ravi Kripalani told PTI.
The firm imports silicon steel for its Nasik unit where it manufacturers electrical steel, a specialised product used for making iron core of motors, transformers and generators.
ThyssenKrupp India is the only producer that uses silicon steel to make a more specialised electrical steel product, grain oriented, used in transformers and magnetic amplifiers.
"Duty on silicon steel can impact our plans to continue to invest in manufacturing facilities for value addition to produce high-end specialised products here," Kripalani said.
The firm has approached Ministries of Finance, Commerce and Steel on the issue of import duty on silicon steel.
"The government has been understanding and sympathetic to our issue. We plan to expand our Nasik plant to start making high permeability grain oriented (HGO) electrical steel, which no one makes in India and is a specialised product," he said.
On the rationale behind excluding silicon steel from import duty, he said that domestic producers of this grade are not selling it in the market and are using it for captive purposes. Some use it to make non-oriented electrical steel.
Analysts say that there is an intent to eliminate domestic competition and not arrest imports of finished steel.
Slapping duty will force firms to buy silicon steel from some of the petitioners, who will take advantage via predatory pricing of this raw material, they added.
Currently, the electrical steel demand in India stands at 3 lakh tonnes (LT), of which 2.4 LT is non-oriented and 60,000 tonnes is grain oriented steel. In the grain-oriented segment 40 per cent is HGO and 60 per cent is normal grain oriented.
Analysts expect demand for grain-oriented to rise to 2.7 LT in the next 5-7 years, of which 60 per cent will be HGO and the rest will be normal grain-oriented as India is expected to invest on expanding its power capacity, among others.