Protectionism Hurting Steel Users

In recent years, concerns have been raised about the Indian market being flooded with cheaper priced steel imports, as this could hamper the domestic steel industry, a huge employer. “The dumping of steel at predatory prices is always a threat to the country,” notes Vikram Amin, Executive Director (Sales & Marketing), Essar Steel, underlining that “while steel mills are not averse to imports, the country needs to be guarded against the dumping of cheap steel.”The biggest threats, according to Amin, are imports from China, which are subsidised by the Chinese government, and imports from countries like Japan and Korea, with whom India has free-trade agreements.“Cheap steel imports discourage local manufacturing and harm the Make in India initiative, growth in employment and the Indian economy,” says Idris Rajkotwala, Executive Director, United Access Floors. “In the interests of the domestic market, we would like the Government to hike the anti-dumping duty on steel imports.”The upshot of these concerns is that “government policy is currently favourable to domestic steel producers; it ensures that the landed price of steel imports is higher than domestic steel prices,” notes Alakesh Roy, Managing Director, Zamil Steel.Other positive steps to protect the domestic steel industry include the waiver of the basic custom duty on nickel, and reducing the customs duty on specific-use grades of hot-rolled and cold-rolled steel coils and on liquefied natural gas used to run gas-based steel plants, observes Manoj Gaur, Managing Director, Gaurs Group, and Vice-President, Confederation of Real Estate Developers' Associations of India, National. Steel structures are being promoted through regulatory and advisory measures, says Dhiraj Jain, Director, Mahagun Group. For instance, they are being recommended for rural housing and crash barriers for roads in hilly areas.Unprotected steel usersWhile a protectionist approach helps the domestic steel industry from the onslaught of imported products making their way into the country attracted by the India growth story, it doesn’t favour the export of steel nor steel users. “A more open market would encourage steel exports,” says Roy.“Regulations laid down by the Bureau of Indian Standards curtail the import of steel, and compel most market leaders to use indigenous steel,” says Nikhil Bothra, Director, Epack Polymers.“Setting a minimum import price on steel imports from certain countries has allowed domestic steel producers to dictate terms to Indian buyers,” says Amod Barve, CEO, Volta Green Structures. “By terms, we don’t only mean the price but also conditions like [having to pay] 100 per cent advance with the purchase order and taking four to six weeks for delivery after payment, conditions that have created cash flow issues for the steel fabrication sector. If free imports were allowed, we would be able to buy steel at 5-10 per cent less than domestic prices.”- CHARU BAHRI