ISA urges government to curb higher grade steel imports

11 February 2016

Indian Steel Association (ISA), a body of top domestic steel producers like Tata SteelBSE -1.49 %, Essar Steel, JSW SteelBSE -0.92 %, JSPL and Steel Authority of India has urged the government to rein in growing imports of higher grades of steel in the guise of base grades of steel that are exempt from a 20% safeguard duty which has led to significant duty evasion in the last three months.

The imports of this particular variety of steel, API 5L-Grade B, have surged over 150% over the last three months ever since safeguard duty became applicable. The imports have surged to around 60,000 tonnes in January 2016 from 23,000 tonnes in November 2015, according to trade intelligence IBIS, which collates export-import data from ports. During this period, price of this grade of steel went down by over $70/tonne from $383/tonne to $318/tonne now.Incidentally there was no import of this grade in September 2015.

In order to contain surge in imports of HR coil, ,as per the petition filed by the domestic steel industry, the government had levied a provisional 20% Safeguard duty on hot rolled coils (HRC) above 600 mm. However, ISA has alleged there has been duty evasion of around Rs 50 crore through import of commercial/ base grade structural HRC of grade IS 2062 in the garb of (American Petroleum Institute) API 5L grade, used for manufacturing pipelines for the petroleum and oil industry.

Incidentally, the base grade IS 2062 and API 5L grade B have similar chemistry and end use application and are commercially substitutable. Since the domestic steel industry had excluded API grade steel in its petition and therefore it is exempt from safeguard duty. This grade is also exempt under Minimum Import Price (MIP) notified by the government last week.

ISA said it had apprehended this misuse and in a letter to revenue secretary Hasmukh Adhia,ISA's secretary general and executive head, Sanak Mishra had said such structural steel is likely to get classified in the guise of API grade circumventing provisional safeguard duty.

More important, it posed a serious threat in terms of human safety due to improper use of API grade in engineering applications. In order to restrict such imports, ISA recommended that the government seek end user certification, copy of API license and copy of recognised Third Party Inspection Report for imports of API 5LB hot rolled coils.


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