India may bring back CVD on steel to check flood of imports
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The ministry backed a CVD levy on steel, and the commerce ministry’s Directorate General of Trade Remedies has already recommended a 19% duty to the finance ministry.
NEW DELHI : India may impose a countervailing duty (CVD) on stainless steel imports to deter the flood of cheap imports and protect local manufacturers, a steel ministry official said.
The ministry backed a CVD levy on steel, and the commerce ministry’s Directorate General of Trade Remedies has already recommended a 19% duty to the finance ministry, which will take a final call on the matter. The CVD is typically imposed to protect local companies that cannot compete with cheap imports that gain from subsidies given by the exporting nation. In the face of such imports, domestic steelmakers, especially the smaller ones, are forced to put their hiring and expansion plans on hold and turn traders of the commodity. India used to impose a CVD on steel till the Union Budget 2021-22 removed it.
“Imports, essentially from two countries, are distorting the market in India since these countries provide a lot of subsidies to their companies… these companies then provide their products at rates that are difficult to compete with, thus, impacting our players. We need to bring in protection to help our companies," the official said on condition of anonymity.
A query sent to a steel ministry spokesperson remained unanswered. The CVD is a long-pending demand of the steel industry, given continuing imports from these countries. “A few countries dumping their products in India has impacted small and medium enterprises badly, and their capacity has gone down by half. A CVD will help arrest their decline," a top executive at an Indian steel company said on condition of anonymity.
This capacity reduction has driven many of the producers out of business and led to job losses, the executive added. Many companies that wanted to make fresh investments in new plants have also put their plans on hold. While imports from China have always been high, Russia has become a big exporter of steel to India. Russia started tapping the Indian market after its traditional markets in Europe imposed economic sanctions on it after it invaded Ukraine.
Russia’s exports to India have been rising since the outbreak of the war from a low base in FY22. Cheap imports from Russia and other countries were expected to ease after the Chinese economy reopened, but that is yet to happen. China’s growth after reopening has been driven more by consumption in the services sector, and steel consumption is still stressed. Till the time consumption grows in key economies, including China, exports to India may remain high since the country has been an outperformer after the pandemic.
(Source : Live Mint)
