India’s Ministry of Steel is rushing into consultations with its counterparts in the Ministry of Commerce, to counter pressures for the withdrawal of ‘subsidies’ to domestic steel producers and at the same time to demand production cuts by China, a Ministry of Steel official has stated.
The official said that the Ministry of Steel is anticipating pressures at the OECD Steel Committee meeting on September 8-9 to pull back what are being claimed as subsidies provided by various local governments in India to steel mills located in their own regions.
The Ministry of Steel official said that various local governments provide reimbursement of taxes and lower electricity tariffs to steel mills and several OECD members have alleged that these are ‘indirect subsidies’ given to steel producers. These reimbursements vary from state to state in India.
While the official Indian strategy before the OECD Steel Committee is still under preparation and will be based on inputs received from the Ministry of Commerce over the next few days, the Ministry of Steel official acknowledged that its ability to counter charges of offering such subsidies would largely determine how aggressively Indian representatives pushed for production cuts by China.
The official pointed out that, while the recent G-20 Summit in China did discuss the need for production cuts in China to avoid a further deterioration of market conditions, the Indian stance on the issue is expected to be muted at the forthcoming OECD meeting considering the allegations regarding local government subsidies for Indian steel producers.