Centre's move to fix minimum Import price on steel to hit Engineering Exports: EEPC
MUMBAI : The Centre’s move to fix minimum import price for 173 products is major advantage for the struggling steel industry, it is expected to push raw material price for engineering companies by 6-7 per cent depending on the steel content in it.
The Engineering Export Promotion Council has demanded that the Centre should reimburse the cost overrun for export-oriented small scale units as they are already struggling to compete in the global markets.
Mr T S Bhasin, Chairman, EEPC India, said the big protection for large steel companies would have a serious debilitating impact on engineering exports which have already declined by 15 per cent in the first nine months of the current fiscal. Minimum Import Price on steel products will lead to further erosion in engineering exports.
EEPC India has sought compensatory mechanism to make up for the increased in raw material price which the distressed exporters, mostly in the SME segments will be made to bear. Segments such as auto and auto parts, industrial and electrical machinery, products of MSME sector, which in any case have low margins and are facing cut throat competition will face sudden escalation in raw material price, giving a further jolt to the exports, said EEPC in a statement. Moreover, the move will have an inflationary impact on the entire domestic manufacturing sector.
“The Government must provide steel at global competitive prices and EEPC India requests the Government to provide a compensatory mechanism for higher steel prices that the MIP entail on domestic prices," he said.
“An new International Price Reimbursement Scheme should be immediately introduced," said Bhasin.
With MIP now in place, he said the safeguard duties should be removed.
He also mentioned that the Advance Authorisation route is not used by the MSME sector due to certain limitations.
Advance Authorisation is issued to allow duty free import of inputs, which are physically incorporated in export product, making normal allowance for wastage. Unless a price reimbursement mechanism is worked out for Engineering Exporters, there will be no revival of Exports in the next six months, cautioned Bhasin.
Engineering Exports, which account for about 23 per cent of the country’s total merchandise exports, slipped 16 per cent to $5.8 billion ($6.9 billion) in December.