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Steel ministry asks for steel to be kept on negative list for RCEP |
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NEW DELHI: Apprehending that the domestic steel industry might face increased risk of dumping from China, Japan and South Korea due to India's participation in a 16-country trade bloc called Regional Comprehensive Economic Partnership (RCEP), the steel ministry has requested its commerce counterpart to keep the commodity on the 'negative list' of items of this multilateral agreement.
The negotiations on RCEP are scheduled to take place in the first week of December. The bloc includes 10 ASEAN countries - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam - and their six partners with whom they have free trade agreements (FTAs), including Australia, China, India, Japan, Korea and New Zealand.
India has experienced a surge in steel imports from Korea and Japan after signing trade deals known as Comprehensive Economic Partnership Agreement (CEPA) in 2010 and 2011, respectively, with these countries. According to official data, the share of these countries in steel imports into India has jumped from 24% before CEPA to 53% by 2013-14.
In addition, India's steel imports from China, the world's biggest producer of the alloy, more than doubled in April-September from a year ago to 1.34 million tonnes. India imported 5.445 million tonnes of steel in 2013-14. The steel ministry apprehends that any decrease in import duty from China may result in a further spurt in cheap imports, harming domestic firms such as Tata Steel, Steel Authority of India (SAIL), Essar, JSW and Jindal Steel.
"Till last year, export growth was more than import. But this year it seems net imports will increase, although item-wise variation exists for different steel products. "The government believes the industry needs handholding and this intervention has been made only to produce a conducive environment for them," a senior steel ministry official said.
The Indian steel industry wants to take its total capacity to 300 million tonnes by 2020 and the government does not want a situation where capacity addition cannot be done, added the official, who did not wish to be identified. India's steel production capacity stood at 99.57 million tonnes at the end of March. According to Essar Steel's chief commercial officer H Shivramkrishnan, steel imports surged 40% during April-October, compared with the year-ago period.
Almost 85% of the imports are from Korea, Japan and China, he said. "The industry is facing a shortage of iron ore fines, cut in gas allocation, etc., which are impacting our steel production. It is important to bring in timely measures to curb the surge in imports and also revisit the FTA agreements and the necessity for import of various grades of steel which are otherwise available with Indian steel mills," Shivramkrishnan told ETin an emailed response.
Economists say that a stand needs to be taken now if India wants to avoid further lowering of tariffs on steel imports from China because duties will go to zero under RCEP on movement of goods and Indian players cannot compete with the Chinese products.
Source : economictimes.indiatimes.com
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