Indian engineering exporters have cautioned that reports of government increasing import duty on steel will “backfire” resulting in fall in engineering product exports and fail to achieve objective of checking current account (CAD) deficit, an official of Engineering Export Promotion Council (EEPC) said on Friday, September 21.
He said that while the government’s reported move to increase import duty on steel is part of an initiative to check imports of ‘non-essential’ productions but by ‘no stretch of imagination could steel be categorized as non-essential as it’s the mother of raw materials for several industrial sectors.
“Cost of domestic steel has skyrocketed because of slew of protectionist measures offered to domestic steel producers and this had already proved detrimental to engineering product exports,” EEPC chairman, R Sehgal said.
EEPC in a communication to the Ministry of Commerce pointed out that higher price of steel available following higher import duty will only increase cost of production of engineering products, render them uncompetitive in international markets, will reduce export shipments which in turn will result in lower foreign currency earnings to the country.
The national representative body of engineering exporters pointed out to the ministry that instead of increasing import duty on steel, inputs for engineering product manufacturing should be lowered to increase India’s competitiveness in global markets, increase volume shipments overseas and higher foreign exchange earnings to ease pressures on negative CAD.
According to reports the government is planning to increase import duty on steel to range of 15 percent from current range of 5-12.5 percent.