Imposition of 12 percent safeguard duty on five steel product categories by India may halt their imports but will force importers to buy these products from domestic mills which are likely to hike prices following the levy, industrial think-tank, Global Trade Research Initiative (GTRI) said in a statement on Wednesday, April 23.
It said that since Indian producers cannot meet demand for specialised steels like abrasion-resistant plates, imports are essential but the new safeguard duty could raise input costs by 8-10 percent, similar to the hike announced recently by local steel mills for flat products.
The 12 percent duty with high threshold values is expected to stop imports and forcing buyers to shift to domestic steel supplies. Indian steel mills are likely to exploit this policy to raise prices further and the trend evident from hike of 8-10 percent ever since news of the safeguard level started circulating in the industry, GTRI said.
It said that GTRI had raised concerns that the Directorate General of Trade Remedies (DGTR) recommended these duties without verifying claims of industry injury, even though domestic steel production has grown by 19 percent and capacity utilisation is high around 83.90 percent.
"These policies go against the spirit of Make in India. Micro, small, medium enterprises (MSMEs) drive 33 percent of manufacturing output, but rising input costs and limited supply may push many out of business," GTRI Founder Ajay Srivastava said.
"We always forget, that local production is not adequate to meet demand for specialised steel and imports are a necessity for large number of steel types. This only helps local large steelmakers to raise domestic price hurting GDP and exports," he added.
The safeguard duty, along with arbitrary Quality Control Orders (QCOs), could severely harm India's MSME-driven downstream industries, GTRI said.
"MSMEs already struggle with monopolistic practices, high minimum order quantities, and long delays in getting supplier approvals, making them rely heavily on expensive domestic steel," it said.
