India's steel ministry favours temporary tax to check imports, source says

Steel Authority of India

18/10/2024 12:29

By Neha Arora and Mayank Bhardwaj
       NEW DELHI, Oct 18 (Reuters) - India's steel ministry
favours a temporary tax to curb rising steel imports, a senior
official with direct knowledge of the matter said, as it seeks
to protect steelmakers reeling from a surge in cheaper Chinese
imports.
    A temporary "safeguard duty" would help curb Chinese
imports, and a process to impose the duty would start soon, said
the official, who requested anonymity as the deliberations are
not public.
    India, the world's second-biggest crude steel producer,
became a net importer of the alloy in the fiscal year to March
31, 2024, and the trend has continued since then, with imports
from China rising steadily.
    India's finished steel imports from China, the world's
biggest steel producer, reached a seven-year high during
April-August.
    Prime Minister Narendra Modi's government has so far
resisted calls to curb imports from China, partly to ensure
sufficient supplies to meet strong demand in the world's
fastest-growing major economy.
    But the authorities now believe the government needs to
impose curbs to avoid a crash in local prices and any major
financial harm to steel producers, the official said.
    India's top steel producers such as JSW Steel  JSTL.NS ,
Tata Steel  TISC.NS  and ArcelorMittal Nippon Steel India have
raised concerns about cheaper steel imports from China.
    Rapid economic growth and higher infrastructure spending
have turned India into the world's biggest steel consumer as
demand tapers in Europe and the United States.
    Indian steel companies need to be financially healthy to
invest and boost capacity to meet future demand, the official
said.
    India's steel ministry did not respond to a Reuters email
seeking comment.
    Ruling out the option of raising basic import or customs
duty, the official said the move would not cover two-thirds of
India's overall steel imports from Japan and South Korea because
of New Delhi's free trade agreements with Tokyo and Seoul. And
he ruled out anti-dumping investigations against China because
they would take about one to two years.
    "The quickest, effective way is a safeguard duty," the
official said. A safeguard duty is a temporary tariff to protect
local industries from cheaper imports.
    The steel industry will write to the commerce ministry and
safeguard measures could be in place in four to six months, he
said. India would also tweak its quality standards to curb
Chinese steel imports, the official said.
    China has a lot of surplus steel capacity. Beijing's crude
steel output in September slid for a fourth consecutive month.
    Separately, the official said the steel ministry has
rejected an industry request to curb exports of low-grade iron
ore, a key steelmaking ingredient, citing adequate stocks.

 (Reporting by Neha Arora and Mayank Bhardwaj;Editing by Elaine
Hardcastle)
 ((neha.dasgupta@tr.com;))