India's steel industry is facing challenges from a surge in cheaper steel imports, primarily from China. The Indian Steel Association (ISA), which represents major players such as JSW Steel, Tata Steel, and ArcelorMittal Nippon Steel India, has called on the Indian government to address this issue by increasing tariffs on steel imports. In a letter addressed to Finance Minister Nirmala Sitharaman, ISA has requested the government to double the customs duty on steel imports to 15%, in order to protect the domestic steel market from the influx of cheaper steel.
Looking to export bulk steel, India, the world's second-largest producer of crude steel, became a net importer of steel in the fiscal year that ended in March 2024. The trend has continued in the current fiscal year, raising concerns among domestic producers. Over the period from April to August, finished steel imports from China reached a seven-year high, while overall finished steel imports hit a six-year high of 3.7 million metric tons. This significant increase in imports is putting pressure on Indian steelmakers, who are struggling to compete with the low prices of imported steel.
The Impact of Chinese Steel on the Global Market
The downturn in China's domestic economy has led to an oversupply of steel in global markets. As Chinese producers look for new markets to sell their surplus steel, countries like Japan, Europe, and the U.S. are also feeling the impact. In response, many governments are taking steps to protect their domestic industries. For example, the U.S. is set to implement a 25% tariff on Chinese steel imports. Similarly, Japanese and European steelmakers have called for import restrictions to prevent their markets from being flooded with cheap Chinese steel.
ISA, in its letter, echoed these concerns and emphasised the need for immediate action to prevent further harm to the Indian steel industry. The association warned of an imminent threat of a continued surge in steel imports in the coming months, which could cause further damage to local producers. The ISA's plea to double the tariff is seen as a necessary measure to protect India's domestic steel sector from unfair competition.
ISA's Request for Additional Import Taxes
In addition to increasing the customs duty to 15%, ISA has also requested the imposition of an additional 25% import tax on steel imports. This, they argue, is essential to create a level playing field for Indian steel producers who are grappling with the financial strain caused by the influx of cheaper imports. ISA is particularly concerned about the practice of selling steel at predatory prices, which undermines the domestic market.
Another critical point raised by ISA is the removal of the "lesser duty rule." This rule ensures that import duties are set at a level that avoids injury to domestic producers, rather than imposing higher duties. ISA believes that the current duty framework is insufficient to protect Indian producers from the adverse effects of the steel import surge.
Conclusion
The Indian steel industry is grappling with a surge in cheaper steel imports from China, as China's economic slowdown pressures global markets. In response, Indian steelmakers are urging the government to double tariffs and introduce extra taxes on imports to protect the domestic sector. As the government evaluates these measures, it must weigh the interests of steel producers against those of industries dependent on imported steel.
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REFERENCE: The Print
