Govt. decision on extending safeguard duty on steel imports for three years likely soon

The government will soon hold a meeting to decide whether or not to extend the safeguard duty on certain items of steel imports till March 2018, official sources told The Hindu.

The safeguard duty is a trade remedy recognised by the World Trade Organisation. It is a temporary measure to counter the adverse impact caused to the domestic industry (local steel producers in this case) due to a sudden and unforeseen surge in (low-priced) imports of the item (largely hot-rolled coils in the case under review).

The government had on September 14, 2015, imposed a 20 per cent ‘provisional’ safeguard duty on several hot-rolled products of steel for up to 200 days following an order from the Directorate General (DG) of Safeguards. The DG Safeguards had recently recommended the extension of this duty till March 13, 2018.

It recommended that the 20 per cent safeguard duty (minus any antidumping duty) should be in place till September 13 this year, following which, this duty is to be reduced to 18 per cent in the next six months (till March 2017), and further down to 15 per cent during the six months after that. A 10 per cent safeguard duty has been recommended for the final six months from September 14, 2017 till March 13, 2018.

An inter-ministerial panel will shortly take a call on whether or not to accept the decision of DG of Safeguards. The panel — comprising representatives from the ministries of commerce, finance, steel and heavy industries — will also consider representations by the user industries, mainly from the engineering sector.

The DG Safeguards said the surge in imports of these items was significant in relation to domestic production and total demand. It said the domestic steel makers have suffered serious consequences due to the huge increase in imports.

The market share and profitability of the local industry declined during the period under review (from 2013-14 to 2015-16), whereas market share of imports has increased during the same period, it added. The safeguard duty will aid in recovery of the domestic industry and will ensure the end-users get a stable supply of the items from the local producers, it said.

Imports of flat-rolled products of steel and iron have been falling since December 2015, EEPC India said.

It said in February, imports of this item had contracted year-on-year by (-)40.2 per cent to $79.85 million and in quantity terms by (-)13.5 per cent to 200,835 tonnes. Also, imports of prime hot-rolled steel coils have been falling since November 2015, and in February the imports shrunk by (-)27.1 per cent to 42.8 million.

Pointing out that hot-rolled coil is a basic raw material for engineering products, EEPC India said the continuation of safeguard duty makes engineering exports uncompetitive. The MIP was leading to an increase in raw material cost by around six to ten per cent.

Though the government had said the MIP will not be applicable to imports under the Advance Authorisation Scheme (AAS), EEPC India said the AAS was not used by the small exporters and had sought a price reimbursement mechanism.

Steel production during April 2015-February 2016 in FY’16 contracted by (-)1.9 per cent (year-on-year) to 82.9 mt.

Steel imports during that 11-month period grew 20.5 per cent to 10.2 mt, while exports shrunk 31.9 per cent to 3.4 million tonnes.

Consumption of the item grew by 4.3 per cent to 72.7 million tonnes.

Kindly send reply or comments on this topic to reporter@newsforyou.in
Source:Thehindu