India weighs safeguard duty on steel as imports surge

The Directorate General of Safeguards (DGS) on Monday said it is likely to impose a safeguard duty on imported hot-rolled steel flats and coils of 600 mm or more width, in order to protect domestic steel makers from dumping of the product by exporters from countries such as China, South Korea, Japan and Russia.

These domestic steel makers, including Steel Authority of India (SAIL), JSW Steel and Essar Steel, filed an application in July seeking safeguard measures against rising imports of `hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more' and relief from such imports  for a four-year period .

These three companies, representing domestic industry, have claimed that their production together accounted for more than 50 per cent of the total production of hot-rolled steel products in India, which represent a major proportion of Indian production of the product in the country and thus have the standing to file the present application.

The DGS said on Monday it has preliminary evidence that China, Japan, South Korea and Russia pose a serious injury / threat of serious injury to the domestic industry, potentially paving the way for an import levy known as a safeguard duty.

The applicants have claimed that these products are not further worked than hot-rolled and are flat products of iron, alloy or non-alloy steel, in prime or non-prime condition having 'as-rolled' edge or 'trimmed' edge or 'slit' edge.

These products may be pickled or non-pickled (with or without skin-pass or tempering), slit or non-slit and having nominal width of greater than or equal to 600mm. These products may be as-rolled or thermo-mechanically rolled or thermo-mechanically controlled rolled or controlled rolled.

These products may have patterns in relief derived directly from rolling. These products may have been subjected to various processing steps like pickling, oiling, rewinding, temper rolling, heat treatment, etc.

However, hot-rolled flat products of steel with nominal width less than 600mm, API grade steel, silicon electrical steel, hot-rolled flat products of steel of spring steel quality, hot-rolled flat products of steel which are electrolytically plated or coated with zinc; hot-rolled flat products of steel otherwise plated or coated with zinc and hot-rolled flat products of stainless steel are not included in the scope of the product under consideration for safeguard measures.

The applicants have submitted all the data from 2011-12 to 2015-16 (Q1). The period for investigation selected is 2013-14 to 2015-16, which is long enough in order to take into consideration the market conditions and to ascertain the need of imposition of safeguard duty.

The transaction-wise import data for the products has been taken from IBIS for 2013-14 to 2015-16 (Q1) as provided by the domestic industry and same has been taken into consideration for analysis. The domestic data from 2011-12 to 2015-16(Q1) have been submitted by the domestic industry and the same have been verified by on-site visit by the department on the basis of central excise records and other records maintained in the units to the extent deemed necessary.

Hot-rolled steel is imported into India primarily from China, Korea, Japan and Russia. The imports of the products have shown an increasing trend in absolute terms as well as in relative terms during the period.

The applicants have claimed that the increased imports of hot-rolled steel have caused and are threatening to cause serious injury to the domestic producers of the product as indicated by the following factors:

• Production of the domestic industry remained at the same level for these years;
• Market share of the applicants has fallen from 45 per cent in 2013-14 to 37 per cent during 2015-16 while the market share of import increased from 6 per cent to 12 per cent during the same period.
• The trend of employment and productivity remained same throughout the period;
• During the period, the capacity utilisation remained same between 2013-14 and 2015-16;
• The profitability of the domestic industry has declined sharply in 2015-16(Q1) and they have started recording losses; and
• Inventory levels with domestic steel makers witnessed a surge from 100 points in 2013-14 to 103 points in 2015-16(A).

The steel makers have been pushing for a safeguard duty instead of an increase in an existing import tax because a safeguard duty would also apply to companies in Japan and South Korea. India has free trade agreements with these countries and gives them import duty concessions.

Indian steel minister Narendra Singh Tomar said late last month the government was concerned about the problems faced by steel companies due to "dumping" by free trade agreement countries.

Total steel imports into India jumped 72 per cent in the last fiscal year to 9.3 million tonnes. South Korea and Japan, which pay duties of less than 1 percent due to the free trade agreements, together sent 3.5 million.