Indian Stainless Steel Development Association (ISSDA), the country’s apex stainless steel body, has voiced concerns about the impending adverse impact on domestic industry due to the temporary revocation of trade remedial duties on importing stainless steel, as announced in this year’s Union Budget.
ISSDA, along with four major associations representing MSME stainless steel producers, namely the Wazirpur Industrial Estate Welfare Society, Delhi; Rajasthan Stainless Steel Re-rollers Association, Jodhpur, Rajasthan; Jagadhri Stainless Steel Re-roller Association, Haryana; and Stainless Steel Re-rollers Association, Ahmedabad, Gujarat has urged the government to reconsider this step as it will distort the domestic market by flooding it with subsidised stainless steel from China and Indonesia, and will put several MSME players on the verge of bankruptcy.
Presenting the Budget proposals for 2021-22 in Parliament on February 1, Finance Minister Nirmala Sitharaman announced that import duties on a host of steel items were being reduced to prevent hardening of metal prices in the country. Also, the Budget temporarily revoked (commencing from February 2 till September 30, 2021) countervailing duty on imports of Certain Hot Rolled and Cold Rolled Stainless Steel Flat Products, originating in or exported from China.
Also, provisional countervailing duty has been revoked on imports of flat products of stainless steel, originating in or exported from Indonesia. The anti-dumping duty on certain grades of Cold-Rolled Flat Products of stainless steel has also been discontinued.
“The government reversed six trade remedies out of which three relate to stainless steel, which is just 3 per cent of overall steel industry in India. Therefore, it has disproportionately impacted stainless steel, including its MSME sector, and considerably dipped the market sentiment,” K.K. Pahuja, President, ISSDA said.
“It is noteworthy that MSME sector constitutes about 35 per cent of the domestic stainless steel industry, spread across the country, and is a major supplier for utensils and household segments. However, the installed capacity for manufacturing stainless steel in the MSME sector is 15 lakh tonnes, with less than 50 per cent being utilised. Keeping this in mind, a potential market brimming with unregulated and cheap imports of Chinese stainless-steel goods is expected to make MSME players go bankrupt or turn them into traders,” he added.
The industry fears that the demand generated by a growth-oriented Budget may be captured by cheap dumped imports by Chinese companies, in and out of China. This will further have an adverse impact on prospective investment in the domestic industry, which has been in financial stress for more than a decade and will lead to loss of employment.
“This move is poised to drift away from ‘Make in India’ stance of the government, while leaving the domestic industry at the mercy of foreign players instead of being Aatmanirbhar,” Pahuja said.
While China has over 30 per cent surplus capacity for stainless steel production, huge capacity additions backed by Chinese investments have brought the installed production capacity of Indonesia to 30 lakh tonnes in the last 2-3 years, along with an additional 25 lakh tonne capacity in the pipeline.
Interestingly, Indonesia’s domestic consumption is a mere 0.2 lakh tonnes. Consequentially, the two nations have been dumping subsidised and substandard stainless steel products in India and other global economies in heavy volumes and unregulated manner in the past several years.
According to ISSDA, China and Indonesia are also known to provide non-WTO compliant subsidies to the tune of 20-30 per cent to their domestic manufacturers, rendering the global stainless steel market significantly destabilised. Consequentially, all economies have countered this irrational dumping by enforcing additional trade remedial duties.