The rampant import of steel products from China has led to the Indian industry calling for hike in import duty. The Budget proposed to revise Customs duty on non-alloy flat steel products from 5 per cent to 7.5 per cent.
China exports large a quantity of boron-treated hot-rolled coils, sheets and plates conforming to alloy steel category and offers export incentive at 9 per cent of export value. This attracts only five per cent import duty and not 7.5 per cent, as increased in the recent Budget proposal, said Mr D.S. Rawat, Secretary-General, Associated Chambers of Commerce and Industry of India (Assocham).
From October 2011 to February 2012, steel imports have increased by 120 per cent over the same period the previous year. The industry body has called for raising import duty on steel products to 10 per cent so that domestic manufacturers can withstand the rising inflow of surplus steel from China.
Excess capacity
China, the world's largest steel producer, with a capacity of 828 million tonnes, has an excess capacity of 135 mt. “This implies that surplus capacity of China is almost twice that of India's annual steel production of about 70 million tonnes,” said Mr Rawat. Also, excluding the alloy steel category of flat steel from the import duty revision will be a conduit for continuing imports unabatedly and will not address the issue in a holistic manner, he said.
China is the world's largest steel exporter, forming about 50 mt, or about 20 per cent of the global steel trade. In addition, China exports almost 70 per cent of the quantity to its neighbouring countries across east, south and central Asia and Australia.