Indian steel companies ask government to impose `safeguard duties'

19 August 2015

In a desperate move, leading Indian steel companies reeling under mounting imports from China, South Korea and Japan have urged the government to impose `safeguard duties', to protect the domestic industry from the onslaught of cheaper imports.

Safeguard duties are levied on imports as a temporary measure by the government to protect the local industry when they perceive a threat from a sudden surge in imports. State-owned Steel Authority of India (SAIL) and private steel makers such as Tata Steel, Essar Steel, JSW Steel have jointly filed a petition with the Director General of Safeguards (DGS) seeking safeguard duties.

A team from the DGS has already inspected the plants of JSW and SAIL, in order to understand the seriousness of the situation. A source in the industry said the visit showed that the government is viewing the situation with utmost seriousness.

"Some of our member companies have come together and filed a petition with the DGS. While companies have a role in filing it, the government too has a role to ensure faster processing of the petition," Sanak Mishra, secretary general of industry lobby group Indian Steel Association and former VP & CEO of ArcelorMittal's (Greenfield projects) in India said.

DGS will conduct an investigation to verify industry data to ascertain whether rising imports have caused injury to domestic industry. If injury is proven, DGS could recommend safeguard duty," an official said. The recommendation will be vetted by a review panel consisting of the commerce, steel and revenue secretary before a final decision is taken by the government.

"The price differential between Indian steel and imports is around 20-30%. But we do not know where the bottom lies since we have seen imports arriving at prices of $300-$315 per tonne," a Mumbai-based steel company executive said. The industry is banking desperately on a quick government response.

In its latest industry overview, Bank of America Merrill Lynch said imposition of safeguard duty or hike in import duty would be a positive for the Indian steel industry . "While imposition of anti-dumping duty is a long drawn out process, the government can impose safeguard duty as per World Trade Organization rules," the report said.

Steel imports jumped 53% between April-June 2015 to 2.88 million tonne (mt). While China accounted for 26% or 7.23 lakh tonne (lt), Japan and Korea together contributed 43% amounting to 5.94 lt and 6.19 lt respectively.