The Indian government has announced the introduction of a five percent ad valorem import duty on specified iron and steel items for the purpose of protecting the domestic industry from cheaper imports, in particular from China, which has recently removed the export duty on various steel products.
According to the government decision, the steel products that will be subject to the five percent import duty will include pig iron, semi-finished products as well as flat and long steel products.
Earlier in April, the Indian government had removed the import duty on steel products in a bid to control inflation. Since then, however, steel prices have dropped and demand weakened on the back of the global economic recession.
For a couple of months, the domestic steel industry under the initiative of the leading steelmakers, had been asking for at least a ten percent import duty to discourage imports and provide support for the falling domestic prices, alleging that cheaper steel imports were contributing to their sagging sales.
However, according to industry experts, a five percent import duty is of little significance since it will push up the cost of imported steel by nearly Rupees 1,100/mt, while the gap between the imported and domestic steel prices is about Rupees 10,000/mt.
As previously reported by SteelOrbis, the Indian government has also restored the Duty Entitlement Passbook Scheme (DEPB) for the steel sector and included the commodity under Focus Market Scheme for exports to Latin America, Africa and Eastern Europe, which are considered as third world countries.