Amidst a slowdown in global steel demand, increasing competition and excess production capacity the world over, Indian steel manufacturers are facing a hostile import scenario of rising shipments of cheap products from South Korea, Japan, and China.
While the government has increased the Minimum Import Price (MIP) on 173 steel products, ranging from $341 to $752 per tonne of steel as a temporary measure to offset the impact, the industry feels more measures are needed to support domestic industry under the present circumstances.
The new MIP rates would be applicable for a period of 6 months from the date of notification, ie, 5 February 2016.
Steel manufacturers are expecting the upcoming Union Budget to announce measures to protect the domestic industry from imports. This could range from hike in import duties on steel products, to reduction in customs duty on key input materials used in steel manufacturing, says Arun Singh, senior economist at Dun & Bradstreet India in a budget wish-list.
The steel industry's budget demands include higher import duty on steel products, particularly long and flat steel products: Flat and long steel products are some of the largest imported steel products to India.
Besides, the industry wants a reduction in import duty on iron ore imports. With a decline in iron ore production in India from 218 million tonnes in FY10 to 125 million tonnes in FY15, the industry has to meet the shortfall through imports. A reduction in import duty is expected which will help to reduce cost of production.
Besides, the industry wants a reduction in import duty on coking coal. Coking coal is a key input in steel manufacturing and in the absence of domestic resources, steel manufacturers resort to imports for their coking coal needs. A reduction in the import duty is expected which will help to control the input costs.