FAM strongly opposes 20% Safeguard Duty on Hot Rolled Steel

FAM strongly opposes 20% Safeguard Duty

 on Hot Rolled Steel

Indian Steel Makers are Looting Domestic Steel Users and Hence, Don’t Need ‘Safeguarding’

by Suman Gupta

Mumbai, 17^th August 2015: Indian steel makers have been hypocritically selling steel to domestic consumers at about 20% higher price whereas at lower prices to international users. In addition, by their own claim in recent times they have ‘strong enough margins’ to pay service debt. Move to impose Safeguard Duty is unjustified and intolerant.

Joining hands with TSSIA, COSIA, SWMAI, BIMA, etc; Federation of Associations of Maharashtra (FAM) strongly opposes 20% safeguard duty on hot rolled steel imports that has been recently announced by Finance Minister Arun Jaitely about levying 20% Safeguard Duty on steel imports with immediate effects for next 200 days.

 “Only recently Indian government increased basic customs duty twice by 2.5% each making effective rate  12.5% from 7.5% and now  20%  Safeguard Duty is announced and hence total effective duty is 12.5%+20%+12.5%  chemical vapor deposition (CVD) making total of 52% !!. The alternate steel sourcing option is, of course, buying from the local suppliers who have historically sold steel at an average of 20% higher price than international rates, but ironically they provide the same material to their international consumers at much lower global prices! They are purely looting the Indian Steel consumers. One way these consumers survived was via imports, even that just costlier.” states Mr. Mohan Gurnani, President of FAM.

Some claim that Indian steel majors have made losses with steep fall in global prices and to make up for them such duties are levied creating burden for steel users. But the fact is that raw material such as iron ore and coal prices have also seen steep fall and hence production costs have also gone down substantially. “It is preposterous, that such majors are spending time and energy to destroy the small and medium business by instigating such move; instead of focusing on new areas of business or optimizing their resources.” said Vinod Bane, spokesperson for BIS action committee formed by FAM and BIMA

With service debts of nearly 3.0 Lac Crore, steel majors shouldn’t be safeguarded with such external protection measures. As per experts, these majors can’t repay the debt in next 25 years even if more such measures are introduced because they have some real operational gaps- high capital expenditure, high operating costs and mismanagement. 

Time and again large domestic steel producers have misused the term ‘dumping’ of steel and misguiding the Government to announce Safeguard Duty right now and BIS Quality Control Order in the recent past. “BIS order is the worst quality control order any country must have ever introduced. Firstly, it demands that international suppliers to through a tedious 10 months of registering process. Secondly, International quality standards are far evolved and globally accepted as compared to that of Indian standard. Thirdly, it stipulates steel consumers to open to scrutiny by the officers leading to criminal proceedings. And fourthly, this would create monopoly amongst the local steel suppliers who are looking to only mint money,” states Gurnani.

Industry associations have come together to fight this duty and are even considering legal option.