FTA misuse by China hitting us: Stainless steel industry

NEW DELHI: A surge in imports from China and countries with which India has signed free trade agreements (FTAs) is heaping misery on the domestic stainless steel manufacturers, prompting them to seek more permanent measures to stem inflows.Given the scale of the problem, government has attempted several steps such as imposing anti-dumping duties, countervailing duties, quality control and anti-circumvention measures but the problem persists, say steel makers.Studies conducted by the industry have shown that despite the measures undertaken by the government to stem dumping of steel, imports account for nearly 20 per cent of the domestic market. Excess capacity in China and in countries such as Japan and Korea and their attention to the Indian market is posing a stiff challenge to the domestic steel makers.“It has become a huge problem. Jobs are getting lost and causing tremendous disruption. It is being dumped via Japan, Korea, Vietnam and Indonesia using the FTA route,” said Abhyuday Jindal, MD of Jindal Stainless (Hisar). He said earlier around 800-1,000 tonnes used to be dumped, but between January to May this year about 6,000 tonnes have already come in. 65586333 New capacities in Indonesia riding on the back of Chinese investments also pose a threat to the domestic market.Domestic manufacturers say the market for stainless steel is limited in Indonesia and the new capacity that is being added could be headed for India. The ongoing trade war between the US and China has also added an element of uncertainty. They are now demanding that steel should be excluded from FTAs that India has signed.State-run SAIL is also confronting the challenge from a surge in imports and sources said the global trade spat has witnessed diversion of products in the mild steel segment.Domestic players also say that the investment of nearly Rs 35,000 crore could be in jeopardy due to “dumping, subsidised imports and tariff benefits under FTAs.” The stainless steel sector also has a large chunk in the unorganised sector. Trade experts said the problem is significant but doubted the theory that Chinese steel was being dumped through countries with whom India has FTAs as there are adequate rules of origin built in within FTA agreements.Rules of origin are the criteria needed to determine the national source of a product, according to WTO definition. It says that their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports.“The yuan has depreciated more than the rupee and the Chinese are past masters in manipulating the currency and that’s why the imports are going up,” said Biswajit Dhar, professor at the Jawaharlal Nehru University, when asked about the sharp surge in Chinese and other steel imports.He said the government needs to adopt a medium term strategy to deal with the issue rather than resorting to short term measures such as imposing different duties. Dhar said the government should set up a forum to address the problems of the industry.Chinese players also enjoy several advantages compared to Indian industry in terms of lower power, logistics and interest costs and access to better grade of coking coal, domestic steel players say.Domestic players say that there should be no tariff concessions for China at least on steel and want the government to have a re-look at the FTAs with Korea and Japan.They also want the government to accelerate the process of imposing anti-dumping duties, which now takes two years from filing the application to imposition of duty.

from The Economic Times https://ift.tt/2wq8mHs