Budget 2016: Raise import duty on all steel products to 25%, says Ficci
Ficci has asked the government to raise the import duty on all steel products to 25% in the upcoming Budget 2016, as demand slows down in China, the world's largest steel producer and consumer.
With the steel demand slowing down in China, the country is dumping steel products in India at cheaper prices, the industry body said.
"Import duty on all steel products should be raised to 25% in the upcoming Budget 2016. As an interim measure, we suggest that the customs duty on all steel products be immediately increased to 15%," the industry body said.
It said the tariffs on both Long and Flat Products need to be increased to provide a level playing field to the domestic industry, which has been severely hit due to rising imports. Customs duty on import of Steel Long Products is 10% and on Flat Products is 12.5%.
In the Union Budget for 2015-16, the government had increased the tariff rate on steel products (Long and Flat Products) to 15%, however, the duties are still only 10% on Long Products and 12.5% on Flat Products.
During 2015-16, after numerous representations and meetings, the Ministry of Finance gradually increased the import duties to their current levels. However, both the interim measure and the Union Budget 2016-17 request are under consideration by the Ministry of Finance.
During April-August, India had imported 4.5 million tonnes (MT) of steel compared with 2.9 million tonnes (MT) during April-August 2014 whereby registering a massive growth of 51%.
The country's steel industry is operating at around 80% capacity utilisation with a huge hit from imports from countries like Japan and Korea under free trade agreements(FTAs).
"FTAs have not benefited domestic steel producers; they rather proved to be detrimental. Thus, in future any FTA or comprehensive economic partnership agreement (CEPA) including a regional comprehensive economic partnership (RCEP) should exclude steel products from its ambit," the Federation of Indian Chambers of Commerce and Industry (Ficci) said.
Noting that FTAs have resulted in huge imports of steel into the country, increasing from 5.4 MT in 2013-14 to 9.3 MT in 2014-15, the chamber pointed out that Japan and Korea together constituted 35% of total import and if China is added, it is 71% of total imports during 2014-15.
"There is a definite case of reviewing the inclusion of steel in FTAs with Japan and Korea," Ficci said, adding that China, Japan, Korea are all steel surplus countries while India is a growing market so India needs to be wary of surplus gushing into the country.
The recommendations, submitted by the industry chamber to the Ministry of Finance and Department of Industrial Policy and Promotion (DIPP) recently, are part of a paper titled 'Executive Actions to enable Make in India'.
The Finance Minister Arun Jaitley will present the Union Budget statement on February 29.