With the Indian rupee depreciating to a two-year low, the Indian government is considering letting the weakness of the currency act as protection against steel imports rather than impose tariff and non-tariff barriers, an official at India’s steel ministry said on Friday, January 15.
The official said that the proposal to impose a minimum import price is currently before the prime minister’s office for a final decision, but several questions have been raised regarding the feasibility of such a restriction at a time when the weakness of the Indian rupee against the US dollar is acting as natural hedge against imports.
The Indian rupee on Thursday, January 15, sunk to a two-year low to INR 67.29 against the US dollar, a level last seen in September 2013.
Acknowledging sharp differences within the government on the issue of the minimum import price and the failure to find a common ground between steel producers and consumers, the steel ministry official said that the prime minister’s office is expected to reject minimum import price recommendations and instead favor using the depreciating rupee as protection against imports.