DG Safeguards recommends 20% duty on flat steel products

Debabrata Das Updated - January 22, 2018 at 07:49 PM.

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Indian steelmakers threatened by cheap imports have reasons for hope.

The Directorate General of Safeguards has recommended a 20 per cent safeguard duty for 200 days on flat steel products, which constitute around 80 per cent of India’s total steel imports.

The DG Safeguards has concluded that imports of hot rolled flat products have caused “serious injury” to domestic manufacturers.

The specific product under consideration was ‘hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600mm or more’.

The recommendation, which followed weeks of discussion with various government departments, will now be examined by the Board of Safeguards, headed by Commerce Secretary Rita Teaotia. “If the Board agrees with the findings, it shall recommend imposition of the duty to the Finance Ministry,” an official statement said.

Safeguards duties are emergency measures that are WTO-compliant and may be temporary applied when imports threaten domestic industry.

Domestic steel makers Steel Authority of India Ltd, Essar Steel and JSW Steel had filed an application on July 27 seeking imposition of safeguard duty.

The information presented in the application was verified by on-site visits before a formal investigation was launched on September 7.

It is understood that at Prime Minister Narendra Modi’s high level meeting with industrialists, economists and bankers on Tuesday, Tata Sons Chairman Cyrus P Mistry had raised the issue for a safeguard duty to protect the domestic industry.

“There exist critical circumstances, where any delay in application for provisional safeguard measures would cause damage that would be difficult to repair, necessitating immediate application of a provision safeguard duty for a period of 200 days, pending final determination of serious injury and threat of serious injury,” Vinay Chhabra, DG Safeguards, recommended as part of the preliminary findings.

Protection from imports The safeguard duty, if imposed, will meet the industry’s demand for protection against cheap imports from countries such as South Korea and those in the ASEAN region.

The government hiked import duty by 2.5 per cent twice on key steel products earlier in the year, but these didn’t cover countries such as South Korea and the ASEAN region with whom India has free trade agreements.

Industry body Indian Steel Association's Secretary General Sanak Mishra declined to comment on the development as he needed more time to study the implications of the announcement.

Hot rolled flat steel products are available at about $330 a tonne or roughly ₹21,921 from China, the global benchmark in the metal prices. Domestic prices are anywhere between ₹33,000 and ₹36,000 a tonne, as on September 1.

During April-August 2015, India imported 4.522 million tonnes of steel, a 51 per cent increase over the same period last year.

Information given to the DG Safeguards states that 3.379 million tonnes of hot rolled flat steel products have been imported in 2015-16.

This has reduced the market share of domestic industry to 37 per cent from 45 per cent in 2013-14.

The market share of imports in the same period has doubled to 12 per cent. The domestic industry’s installed capacity for hot rolled flat products of 23.537 million tonnes is currently operating at 76 per cent utilisation.

Published on September 9, 2015 11:15