India’s Steel Ministry has reached out to importers, particularly OEMs in the automobile sector and pipe manufacturers, asking them to up sourcing from mills here. The Ministry is also looking into rising instances of steel imports coming in from “specific nations” who are “reportedly routing it through FTA countries”. Strengthening of import rules are being mulled too.
Imports in FY23 was 4-5 per cent of total steel consumption of 125 million tonnes (mt).
Last fiscal imports stood at 6.7 mt, up 45 per cent; while in Q1FY24 it increased 19 per cent, y-o-y to 1.40 mt. In July, India turned net importer of steel (imports exceeded exports) by 0.074 mt.
Imports
According to Nagendra Nath Sinha, Secretary, Ministry of Steel, imports rose especially in select speciality segments across specific sectors like automobiles, pipe manufacturers and others, where Indian mills have “limited” presence. While in case of auto, there are specific requirements by the OEMs which are met through imports, for pipe manufacturers, there are concerns over prioritising supplies to them by Indian mills.
“So, we have reached out to importers, across sectors like auto and pipe, asking them to up local sourcing. We are in touch with Indian mills too and working with them to up production of speciality or high-end steel targeting these sectors” he told businessline.
Stricter rules
Nearly 60 per cent of steel coming in are from countries with FTAs (free trade agreements) like Korea, Japan and so on. And Indian steel mills have often pointed out to these FTAs as lop-sided that impact access.
A specific concern has been some countries (mostly China) diverting their lower priced offerings through nations with which India has an FTA.
Typically, what happens, a non-FTA country sells their products to a subsidiary or own arm in countries with which India has an agreement. Subsequently these steel products — at a much lower price — find their way to India as import from an FTA country.
Structural issues
“There are some structural issues, and we are looking into that,” Sinha explained.
He added, work has begun on strengthening rules and India is now stressing on disclosures relating to “melt and pour provisions” thereby determining countries where the steel is melted and poured; and, on “reworking these clauses across existing FTAs and in new ones”.
The Steel Ministry has also approached the Ministry of Commerce to keep in view the sensitivities and concerns of steel industry while negotiating new FTAs.
Rules of origin
Similarly, “rules of origin” (where the product is made or from where raw materials are being sourced from) are being strengthened to reduce chances of low-cost imports coming-in. “In case of specific complaints, we do recommend action. This apart, some of the import rules are being strengthened as we go along,” Sinha said.
Recently, a senior Cabinet Minister maintained that India-ASEAN FTA was “ill-conceived” and unfair to the domestic industry. It is being pointed out that whole India opened its markets to Japan and Korea under FTAs, they did not reciprocate by allowing Indian exports to their countries.