Steel imports continued to surge amid weak demand and rise in domestic output.
During April-August this fiscal, steel imports into India grew 38.6 per cent to 3.32 million tonnes over 2.39 mt in the corresponding period last year.
Production during this period grew 4.3 per cent to 31.71 mt from 30.42 mt, while consumption rose 6.9 per cent to 31.02 mt from 29.01 mt.
Exports during the period saw a decline of 4 per cent at 1.85 mt against 1.93 mt, as per provisional data collated by the Joint Plant Committee under the Ministry of Steel.
The surge in imports could be attributed to the continuing trend of flooding the Indian market by players in countries such as Japan and Korea.
Taking advantage of a low duty structure under the Free Trade Agreement (FTA) with India, steel makers in Korea and Japan have stepped up their shipments in recent times, sources said.
Interestingly, the rise in imports has happened in the traditional lean period, when consumption turns sluggish during the monsoon season and domestic players are staring at an inventory build-up.
Import of carbon steel or non-alloy steel grew 40.2 per cent to 2.60 mt from 1.85 mt in the corresponding period last year. Alloy steel imports were up 33 per cent at 7.2 lakh tonnes against 5.4 lakh tonnes in the corresponding period last year.
Meanwhile, the rise in imports has begun to hurt domestic players. Recently, Sajjan Jindal, Chairman and Managing Director of JSW Steel, called for excluding steel products from the purview of FTA with Japan and Korea.
India had signed a Comprehensive Economic Partnership Agreement with Korea in January 2010. A similar agreement with Japan was signed in August last year.
As a result, India is expected to cut the duty on select products imported from these countries progressively to nil by 2016-17.
At present, import duty on Korean and Japanese steel products has been reduced to 3.13 per cent from 5 per cent in 2010. Steel imports from other origin attract a 7.5 per cent duty in India.