Industry body Assocham has called for raising the import duty on steel products from 5 per cent to a minimum of 10 per cent so that Indian manufacturers have a level playing field vis-a-vis imports from China and the Commonwealth of Independent States (CIS) countries.
The challenging global environment has resulted in fierce competition and increased pressure on performance and price reduction. The oversupply in international markets is forcing China and the Commonwealth of Independent States (CIS) to dump their steel products like hot-rolled coils... and other coated products into growing markets like India, said the Assocham Secretary General.
As a result, the Indian steel industry has reduced its production and is running at lower capacity utilisation, he said. China and CIS countries possess huge coking coal and iron ore resources, which give them cost-competitiveness, whereas India depends on imports for its requirement.
In the past one year, coking coal prices have increased by more than 100 per cent, putting an additional burden on steel manufacturers. Nearly 50 per cent of the steel manufacturing cost is on account of coking coal and 20 per cent on account of iron ore.
Most importing nations protect their domestic products by imposition of a marginally higher import duty while encouraging exports by offering various incentives, he said. Raising import duty to a minimum of 10 per cent will encourage the growth of the domestic steel industry and ensure that the India growth story is kept intact, he said in a pre-Budget memorandum to the ministries of finance and steel.
In the next two years, steel-making capacity is set to expand by 15-20 million tonnes to meet the growing demand for high-end consumer products like cars, fridges and washing machines.