Government is going to impose heavy duty on steel imports!
The Indian government is once again considering imposing duty on steel import. In technical language it is called ‘safeguard duty’. Its direct objective is to stop the flood of cheap steel coming from China and other countries and to provide security to Indian industries.
According to the report of Economics Times, the government is very serious about this proposal. India, which is the world’s second largest crude steel producer, is creating this ‘safety net’ to protect its domestic market from external shocks.
11-12% tax proposal
In the month of August itself, the Directorate General of Trade Remedies (DGTR), which comes under the Union Commerce Ministry, had made an important recommendation. He had suggested that import duty of 11% to 12% should be imposed on certain steel products for the next three years.
According to the report, this proposal is now under serious consideration. Although, no official statement has come from the Finance Ministry on this yet, but market experts are seeing it as a big step. This decision is also important because in April this year, the government had imposed a temporary duty of 12%, the period of 200 days of which has ended this month.
‘China’ cause for concern
If we look at the figures, most of the finished steel in India is coming from South Korea and not from China. In the first seven months of the current financial year, South Korea exported 14 lakh metric tonnes of steel to India. After this comes China, Japan and Russia.
Still, the main concern of the government and the industry is China. Sources say that Chinese steel prices are so low that it becomes difficult for Indian producers to compete with them. This ‘cheap price’ has made the Indian market vulnerable. However, the good news is that India’s finished steel imports have declined by 34.1% in the first seven months of this year as compared to last year.
What will change the equation?
On the other hand, across the border, the steel industry in China is also going through huge turmoil. According to a government steel association, this year China’s steel production is going to go below 1 billion tons for the first time in the last six years. The Chinese government is moving towards fulfilling its promise of reducing production.
Beijing also introduced a new and stricter plan to balance steel capacity at the end of October. Its objective is to re-balance the supply and demand in the market, which is currently facing the problem of overcapacity.