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Protest against proposed Safeguard duty

Representatives of Steel Association met the Minister of Heavy Industry and Public Enterprises for proposed Safeguard duty

The protest by the steel traders and associations against the 25% safe guard duty on imported steel proposed by the Central Government, is increasing with each passing day. In the first phase of the protest, all the trading organizations gathered and sent a letter expressing their views strongly against the proposed Safeguard duty addressing all the ministries concerned to this case.

 After which, the stakeholders of steel industry, released an advertisement and now met Union Minister Shri Arvind Sawant. Representatives of 10 trade associations of the steel sector met Shri Arvind Sawant, Heavy Industries and public enterprise minister in Dadar office today. In this meeting traders informed Shri Arvind Sawant that only 5% of the steel is imported in India. A significant portion of the imports comprises of grades, sizes and quality that is not available sufficiently or timely in India or of finished goods for export purpose. In such a situation, if safeguard duty is implemented when the market growth is already slow, then it will impact negatively to the market. Not only this, many businesses might just have shut down shops, leading to increasing unemployment in the country.

While speaking to the reporters after the meeting with the Union Minister, Mitesh Prajapati, spokesperson of the Citizen’s Civic Solutions Foundation said that Shri. Arvind Sawant heard to the pleas of all the traders and responded positively. Shri. Arvind Sawant said that it is important to look at the demands of the traders and next month, all the traders have been invited to come to Delhi. A meeting will be organized in Delhi between the representative of the trade organization and the Ministry of Commerce and Micro, Small and Medium Enterprises. The Steel traders and associations will be meeting with Nitin Gadkari and Piyush Goyal.

Steel Consumers Join Hands to Oppose The Petition on Safeguard Duty of 25% on Imports of Steel

Imposition of provisional safeguard duty of 25% on imports of steel is likely to cause serious disruption in steel sector affecting lakhs of steel users across India.

Major steel consumers and their associations like CAMIT, TSSIA, FAI, COSIA, SWMAI, SUFI, Hooghly Chamber of Commerce and Industry, Steel Chamber of India, Federation of Industries of India, and a few others are voicing their concerns on the petition filed by Indian Steel Alliance (ISA) with the Directorate General of Trade Remedies (DGTR) for imposition of 25% Safeguard Duty on Imports of a wide range of Steel items, which is not justified. The total imports of steels are barely 6% of the total gross production in India. As per WTO rules, Safeguard measures are defined as “Emergency” actions in response to large scale increase in imports or a surge in imports. But the ground reality is that imports have considerably decreased in the last three years as a result of a series of various protective measures, both tariff and non-tariff based that were announced for various steel items since September 2015.

The total imports were merely 4.68% of total production in the country as of May 2019. With 12.5% of basic customs duty on most flat products, like HRC, plus a surcharge of 10pct,  imports from most countries like China, Europe and The Commonwealth of Independent States has become unviable and substantially declined. A significant portion of the imports comprises of grades, sizes and quality that is not available sufficiently or timely in India or of finished goods for export purpose. India has signed Free Trade Agreements with Japan and South Korea, but the quantities of material imported from these countries are of very small percentage of the total consumption in India. These countries have several investments in India, like the Posco Maharashtra set up by the steel giant Posco of South Korea.

Since 2015, there have been numerous announcements made by the Indian Government to protect the primary steel industries. These include minimum import price, safeguard duty, anti-dumping duty, steel quality control order, etc. As a result of such protection, the Steel prices prevailing within the country have been substantially higher vis-à-vis international prices. Steel users in India therefore pay substantially higher prices to domestic mills compared to the prevailing international prices. The Safeguard Duty lapsed just a few months ago, but the anti-dumping duties is already in place on most items of Steel.

In disagreement with the petition filed by the ISA, Vaibhav Purohit states, “We strongly disagree with the argument that imports will affect the economy badly. Instead, imposition of safeguard duty on steel imports will make steel costlier and only a few steel mills will be in a dominating position, creating a monopolistic market in India, which will give rise to agitation amongst the steel users, traders, SMEs and MSMEs”. Vaibhav Purohit, spokesperson of Citizen Civic Solutions Foundation organization is coordinating with the steel fraternity and associations for aforementioned issue.

The steel bodies of associations have written letter to the Honorable Prime Minister, Honorable Finance Minister, Honorable Commerce Minister, Honorable Steel Minister and Honorable MSME Minister, explaining the issue and urging the officials to not implement safeguard duty on imports of steel. In the letter they have put forward the views of the secondary steel producers, steel users, small & medium scale enterprises, and importers. Importers have argued that this is against the principles of natural justice as material booked by them a few months earlier and for which having opened an irrevocable Letter of credit, makes them totally helpless.

In addition, they claim that SMEs and MSMEs have been suffering a lot lately, as the domestic prices prevailing in India have been substantially higher, demand for steel very low due to various factors such as elections, liquidity issues in the market. With the consumer industry already reeling under a variety of problems, this situation has added another dimension to their stress.

Most Engineering companies selling domestically as well as exporting products, require several items or sizes or grades that are not available in India or not available in a timely manner. It is therefore necessary to have a careful examination of these aspects before announcing any such massive trade barrier. SME and MSME sector is dependent on these imports for consistent supply and now they will either have to reduce production due to non availability or just shut down shops leading to increasing unemployment in the country.

At the same time, the petitioners themselves are enjoying a much stronger financial position on the back of the strong protective measures announcements made by the Government during the last 3 years. The short-term benefit to few primary producers by such a move may be miniscule as compared to the huge long-term damage and costs which will be borne by lakhs of small steel users, SMEs and MSMEs and our country as a whole.

An artificial scene is sought to be presented by the ISA through its petition. It is learnt that the petitioners have argued that as a consequence of duties imposed by the USA and consequently by the EU, Turkey, etc., some Asian countries like South Korea, Japan, China have diverted big volumes in India that they lost to the U.S.  From the various data available, this is far away from reality.  All these 3 countries have very limited quantity of steel exports to the USA.

In the forthcoming days, steel bodies under the guidance of Citizen Civic Solutions Foundation have decided to create public awareness about the aforesaid issue in print and social media. Further, all officials have planned to meet the government representatives and issue a memorandum.

About Citizen Civic Solutions Foundation:

Citizen Civic Solutions(CCS) is a non-governmental and not-for-profit organization. It is a voluntary citizens’ group, which is organized to address issues in support of public interest. CCS performs a variety of services and humanitarian functions, bringing citizens’ concerns to government authorities, support government’s new policies and programs, implementing them at local level, and encourage participation of civilians at the community level. It actively initiates dialogues between authorities and common man. In addition to helping with solving the issues to day-to-day life, CCS also serves as an organized charity and fundraising association joining hands with other organizations around specific issues, such as human rights, the environment or health.

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