The Indian government’s imposition of 12 percent safeguard duty to protect the domestic steel industry is expected to create complete disruptions of the supply chain and cost foundations of construction equipment manufacturing, which is crucial for development of infrastructure sectors, the Indian Construction Equipment Manufacturers' Association (ICEMA) said in a statement on Tuesday, April 29.
It said that Indian construction equipment manufacturing is worth $9.5 billion and vital to the development of the country since it provides the high-performance equipment needed for infrastructure projects.
ICEMA said that steel is a critical raw material in construction equipment manufacturing, particularly specialised high-tensile and performance-grade steels that are currently not produced in India in sufficient volumes or specifications. When the safeguard duty goes into effect, it will threaten manufacturing schedules and disrupt continuous operations.
During the investigation period, steel prices escalated by INR 10,000/mt, thus demonstrating that the 12 percent duty has already introduced major price fluctuations. Now that the 12 percent tariff has been formally implemented, input costs will rise even more, compelling construction equipment manufacturers to think about raising prices, which would affect the cost of infrastructure projects across the country, it said.
At a time when overseas purchasers are looking for alternatives to China under ‘China plus One’ sourcing policies, the move could potentially undermine India’s export competitiveness in the global construction equipment market, the association said.
The construction equipment makers request the government to reconsider the safeguard duty’s long-term effects and take mitigation steps to lessen the impact on downstream businesses, the statement added.
To safeguard India’s infrastructure aspirations and global competitiveness, a well-rounded, data-driven strategy that supports both domestic steelmakers and critical industries like the manufacturing of construction equipment is necessary, it said.