The domestic stainless steel manufacturing industry has criticised the Union Budget 2021 presented by Finance Minister Nirmala Sitharaman in the parliament today for reopening the floodgates for Chinese firms to dump their products in the Indian market.
The government has slashed import duties on a host of steel products including stainless steel items and also revoked some of the trade remedial measures taken between 2016 and 2019 to thwart cheap imports from China. It followed a clamour for reining in steel makers in the country by user industries after a sharp spike in prices by up to 50 per cent in some cases, which has adversely impacted profitability of steel consuming sectors.
"The temporary suspension of the countervailing duties on stainless steel flat products imports has been a big unintentional gift to Chinese companies that will hit the domestic stainless-steel industry very badly, which has been in financial stress for more than a decade. For Chinese companies in Indonesia, this translates into heavy flooding of Indian markets with duty-free imports under ASEAN FTA," said K K Pahuja, President, Indian Stainless Steel Development Association. "Imports from Indonesia skyrocketed from just 8,601 MT in 17-18 to 76,102 MT in 2018-19 and 280,575 MT in 19-20. This will not only hamper Indian production but will turn many MSME manufacturers into traders."
These duties had been imposed by the Director General of Trade Remedies (DGTR) to stop non-WTO compliant imports into the country. Industry says revoking them also goes against the vision of a self-reliant India.
"Indian stainless steel industry was keen to advance Govt's #atmanirbhar Bharat vision, but allowing free-flowing subsidised imports from Chinese companies impedes the #MakeInIndia goal. We await level-playing field," tweeted Abhyuday Jindal, managing director, Jindal Stainless, India's largest stainless steel manufacturer.
Stainless steel constitutes 3 per cent of overall steel requirement in the country but over a third of the industry is comprised of micro, small and medium enterprises that may be hit more by the proposals of the Budget.
"The government's geopolitical stand on banning Chinese apps on one hand and easing bulk trade on the other to favors Chinese producers, where unfair trade practices have been proved, runs contrary to the Atmanirbhar Bharat and $5 trillion economy dream," Pahuja added. "This has more than offset the positives of Union Budget in terms of duty exemption on scrap and higher infrastructure spending."
Intermediary industries like forgings are not complaining though.
"A recent sharp rise in iron and steel prices has affected MSMEs and other user industries severely. The positive step of reduction in customs duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy, alloy, and stainless steels would certainly contribute to better raw material prices and reduced input costs," said Vikas Bajaj, President, Association of Indian Forging Industry (AIFI).