Prolonged Chinese Steel Imports May Impact Indian Steel Industry Investments

Prolonged Chinese Steel Imports May Impact Indian Steel Industry Investments

Sub : Eco

Sec: External sector

• Unfair Pricing of Chinese Steel Imports:
  • India’s steel imports from China have been identified as unfairly priced.
  • Chinese steel producers are reportedly selling at prices below production cost, leading to unfair competition as they can continue to sell even at a loss.
• Impact on Investment Plans:
  • If these low-cost imports continue, it could affect the investment plans of the Indian steel industry, impacting its growth and expansion strategies.
• Rising Demand for Steel in India:
  • India’s steel demand has surged due to rapid economic growth and increased infrastructure spending.
  • Steel demand reached a seven-year high in the April-August period, making India a major market for steel consumption, especially as demand slows down in the U.S. and Europe.
• India as a Net Importer of Finished Steel:
  • Despite being the world’s second-largest producer of crude steel, India remains a net importer of finished steel.
  • Steel imports from China have hit a seven-year high during the April-August period.
• Chinese Steel Imports from Southeast Asia:
  • Apart from direct imports, some Chinese steel is entering India through Southeast Asian countries, increasing competition for domestic producers.
• Government Response and Industry Appeals:
  • The Indian government has initiated an anti-dumping investigation on steel products imported from Vietnam.
  • The industry is seeking higher import tariffs or safeguard measures to counter rising steel imports and stabilize the local market.
• Price Trends for Flat Steel Products:
  • Due to the ongoing influx of Chinese steel, prices for flat steel products in India are expected to remain range-bound, limiting profitability for local producers.

Dumping :

 If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.

Safeguard Measures under WTO:

• Anti-Dumping Duty: Imposed when a foreign company exports a product at a price lower than its home market value, to protect local industries from unfair competition.
• Countervailing Duty: Imposed to counteract subsidies given by foreign governments to their exporters, which distort trade.
• Quotas: Limits the quantity of a particular product that can be imported during a set period.

Tariffs: Taxes on imported goods to protect domestic industries or raise revenue.

• Anti-dumping duties are imposed when it is conclusively proved that a particular item is being exported at a price lower than what is prevailing in the domestic market of the exporter and is leading to disruption in the domestic market, injuring the local producers
  • An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
  • The duty is imposed only after a thorough investigation by a quasi-judicial body–the Directorate General of Trade Remedies-in India. It is aimed at ensuring fair trade practices and creating a level-playing field for domestic producers.
    • Post initiation of the probe, the government can levy customs duties..
• The DGTR recommends the duty, and the Department of Revenue takes the final decision to impose it.
• The imposition of anti-dumping duty is permissible under the World Trade Organization (WTO) regime.