Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Leading primary steel producers in India have ruled out any significant impact of the government’s move to cut import duty on steel products, while engineering goods producers have hailed the move saying it will lower input cost of domestic manufacturers and help rein in the steep rise in domestic steel prices over the past few months. 


In the Union Budget for FY2022 the Indian government reduced customs duty to 7.5pc on imports of several steel products including semi-finished steel, flat and long products of alloy, non-alloy and stainless steel on Feb 1. The government also revoked anti-dumping (AD) and countervailing duties (CVD) on bars, rods of alloy steel, high-speed non-cobalt flat-rolled steel product, coated or plated with aluminium or zinc. These waivers will remain in effect till October.


Steel producers believe that most imports into India are from free-trade Asian countries (FTA), which are already exempt from duties. Tata Steel’s CEO and MD, TV Narendran and JSW’s Group CFO Seshagiri Rao have dismissed any impact on domestic steel industry citing that domestic prices are lower than the landing prices of imported material despite the reduction in customs duty, according to local media. 


The Indian Stainless Steel Development Association (ISSDA), which had demanded an increase in duty on stainless-steel flat imports to 12.5pc, rued that the duty cut will flood the market with Chinese stainless steel. It also expressed fear that domestic player might indulge in trading imported stainless steel products instead of producing them locally, thereby defeating the government’s motive of promoting self-reliance in the post-COVID era.   


A-third of India’s stainless steel producers are small-scale producers, who have been adversely impacted first by the pandemic and then by the sharp rise in key raw material prices such as steel. The duty cut is aimed at providing relief to these manufacturers and generating employment in downstream industries. Industry bodies representing the engineering good exporters and forging industry are thanking the government for lowering their input cost and increasing their competitiveness.


Demand for steel in general is expected to remain high driven by huge infrastructure investments announced in the budget. India’s stainless steel demand is growing at a CAGR of more than 8-9pc, according to ISSA. But lower per capita consumption of SS at around 2.5kg compared to a global average of 6kg indicates immense growth potential in the coming years. 

Leave a Reply

Your email address will not be published.