India has raised duties on certain steel products by up to 2.5 percentage points, as domestic producers struggle to cope with surging cheap imports from China and Russia, among others.

The government has raised import tax to 10 percent from 7.5 percent on flat steel and to 7.5 percent from 5 percent for long steel products, the government said on Wednesday.

Almost all companies making the alloy in India have urged the government to take action against what they claim is "dumping" of cheaper steel, which has pressured prices and hit profitability over the past few quarters.

The industry welcomed the government's decision on Wednesday, but said the raise was not enough to significantly reduce shipments coming in from Japan and South Korea, countries with which India has free trade agreements.

"I think at least it shows that the government has recognised that there is an issue and taken a step, though a small one, to recognise it," said Sanak Mishra, Secretary General of industry group Indian Steel Association.

Shares in Indian steel companies reacted positively with Tata Steel Ltd closing up 3.6 percent and JSW Steel Ltd ending Wednesday up 3.3 percent.

In its annual budget in February, India raised the cap to which it can increase import duties to 15 percent from 10 percent, but kept the tariff unchanged.

Earlier this month, the government imposed anti-dumping duties ranging from $180 to $316 per tonne on some industrial-grade stainless steel in a bid to stem the flood of imports.

The tariff hike will reduce the gap between domestic steel prices and the landed cost of Chinese steel by around 2.5 percent, India Ratings analysts wrote in a note, adding that even that benefit could be hurt by an appreciating rupee.

"Additional tariff and non tariff measures are required to ensure cheap and unfair imports do not damage the domestic steel industry which has invested significant capital," said H Shivramkrishnan, Chief Commercial Officer, Essar Steel.

 

reuters.com

Report Abuse