Steel imports need FTA and China-specific safeguards
The government is conducting an investigation on seven categories of steel products. However, imports are surging mainly under two categories of flat-rolled products of iron or non-alloy steel - HS 7208 and 7210, which account for over 75 per cent of imports and drive most of the growth
Chennai: In order to curb increasing imports of steel, the government should not impose global safeguards, instead look at FTA bilateral safeguards and China-specific measures. Further, safeguards need to be imposed only on two categories, which have seen higher imports, finds GTRI.
The government is conducting an investigation on seven categories of steel products. However, imports are surging mainly under two categories of flat-rolled products of iron or non-alloy steel - HS 7208 and 7210, which account for over 75 per cent of imports and drive most of the growth.
For HS 7208, 77 per cent of imports enter India duty-free under FTAs with Japan, South Korea, and Vietnam, while 19 per cent come from China with duties. For HS 7210, 58 per cent of imports are duty-free under FTAs and 26 per cent come from China with duties.
“Investigations should focus on these two codes, as the other five categories with low volumes or negative growth. As most imports are from FTA partners or China, investigations should use FTA-specific safeguards and anti-dumping/safeguard measures targeting China. Using global safeguards could lead importers and foreign governments to challenge them at the WTO,” said Ajay Srivastava, founder of GTRI.
Further, SMEs will be largely affected by the global safeguards as large firms often use the India-ASEAN FTA to import steel duty-free, get BIS approvals for select foreign suppliers, and ensure dominant suppliers are exempt from antidumping measures.
Large steel producers have been profitable over the past three years, with EBITA margins ranging from 9 per cent to 23 per cent. Their profitability is evident, with margins of Rs 9,000 to Rs 15,000 per tonne, and in stainless steel, up to Rs 20,000 per tonne.
“Large steel producers are not struggling due to imports; rather, they face internal inefficiencies and benefit from market dominance, often at the expense of SMEs and fair competition. Their practices highlight the need for balanced policies for a big steel user sector that add most value and drive the GDP and also to protect smaller players and encourage innovation in the sector,” finds GTRI.