Budget 2016: Raise import duty on steel to 25%, says Ficci
NEW DELHI: Ficci has asked the government to raise the import duty on all steel products to 25 per cent in the upcoming Budget, as demand slows down in China, the world's largest steel producer and consumer.
With demand slowing down in China, it is dumping steel products in India at cheaper prices, the industry body said.
"Import duty on all steel products should be raised to 25 per cent in the Union Budget 2016-17.
"As an interim measure, we suggest that the customs duty on all steel products be immediately increased to 15 per cent," 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 per cent and on Flat Products is 12.5 per cent.
In Budget for 2015-16, the government had increased the tariff rate on steel products (Long & Flat Products) to 15 per cent; however the duties are still only 10 per cent on Long Products and 12.5 per cent on Flat Products.
During 2015-16, after numerous representations and meetings, Ministry of Finance gradually increased the import duties to their current levels. However, both the interim measure and Union Budget 2016-17 request are under consideration by the Ministry of Finance.
During April-August, India imported 4.5 million tonnes steel compared with 2.9 million tonnes during April-August 2014 registering a massive growth of 51 per cent.
The country's steel industry is operating at around 80 per cent capacity utilisation with huge hit from imports from countries like Japan and Korea under FTAs (free trade agreements).
"FTAs have not benefited domestic steel producers; they rather proved to be detrimental. Thus in future any FTA or CEPA (comprehensive economic partnership agreement) including RCEP (regional comprehensive economic partnership) should exclude steel products from its ambit," 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 per cent of total import and if China is added, it is 71 per cent of total imports during 2014-15.
"There is a definite case of reviewing the inclusion of steel in FTAs with Japan & 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 Finance Ministry and Department of Industrial Policy and Promotion recently, are part of a paper titled 'Executive Actions to enable Make in India'.