ASSOCHAM calls for raising import duty on HR steel

Sunday, 06 Feb 2011
The Associated Chambers of Commerce and Industry of India in the interest of domestic steel Industry has stressed upon raising the import duty on hot rolled coils from prevalent 5% to minimum 10% to encourage the growth of domestic steel industry.ASSOCHAM feels that pro active policy measures adopted by Government of India can help expand the HR capacity by additional 8 million tonne during 2011-12, making India surplus for HR by more than 6 million tonne.In a proposal to the ministry of finance, ASSOCHAM has urged the government to raise import duty on HR minimum by 5%. It is imperative to mention that India used to be a net exporter of HR during the last decade but it has become a net importer since past 5 years and has already imported around 2 million tonne of HR Coils in the current financial year. China along with CIS accounts for almost 75% of total imports.ASSOCHAM has pointed out that excess capacity coupled with cost competitiveness are fundamental reasons for export of primary input raw materials for manufacturing steel ie iron ore, coking coal. Coking coal contributes approximately 50% of total cost while 20% cost is contributed by iron ore.Countries like China and CIS with excessive raw material resources are cost-competitive in the international market. China stimulates exports by giving an export incentive of 9% on HR Coils, on the contrary coking coal pries have increased by over 100% thereby, pressurizing cost-competence of Indian steel producers.ASSOCHAM has also outlined four fundamental factors that present adverse scenario for Indian steel companies producing HR Coils - excess capacities in China and CIS countries, cost competitiveness due to cheap source of raw material esp. coking coal, 9 %incentive given to Chinese exporters, new HR Coil capacities developing in India.