In order to counter surge in cheaper import from China, the Indian government is to increase import duty by 2.5% on certain steel products. As reported, the proposal has been tabled in the parliament by finance minister and duty hike is anticipated soon.
India’s steel import had surged by 71% to 9.31 MnT in FY15 compared to 5.45 MnT in FY14. Thus, to combat the problem of rising import, the Indian government hiked import duty on flat and long steel products in June’15. Duty on flat steel products was increased from 7.5% to 10% and on long steel products from 5% to 7.5%.
Duty hike unlikely to impact import from Japan and Korea
Out of total flat steel import, about 55% is contributed by Japan and Korea and 20% is China’s share. Therefore, duty hike in June did not have much impact on flat steel import from Korea and Japan as FTA has been signed with both the countries. Import duty levied on imported products from both the countries is 0.8% and 1.25% respectively. In fact, after duty hike, import from Japan and Korea increased significantly.
Although, import duty was hiked on Chinese import, imported offers were reduced by about 8%, nullifying the impact of duty hike.
Demand for safeguard duty
As import duty hike do not have much impact on cheaper import, domestic players are not very keen in duty hike and are demanding imposition of safeguard duty, which will be applicable to all nations including countries covered under FTA.
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