Indian Government Cuts Import Duty on Korean HRC under FTA

As per the notification released by Ministry of Finance dated 30 Dec’15, the customs duty on HRC imports from Korea has been reduced to 0.63% from 1.25% under Comprehensive Economic Partnership Agreement (CEPA), which is a part of bi-lateral trade agreement between India and Korea.

“In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Indian government in the Ministry of Finance (Department of Revenue), No.152/2009-Customs, dated the 31st December, 2009, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 943 (E), dated 31 Dec, 2009.”

India had entered in to bilateral FTA for eight years with Korea and Japan in 2009 and 2011 respectively. Under FTA, duties on most of the products, traded between the two countries are reduced to zero in phases.

However FTA with Korea and Japan has added to the woes of Indian steel industry as steel imports from both the countries have increased drastically in last one year.

As per JPC data, India’s total steel imports from Korea increased by about 70% from 1.19 MnT in Apr-Nov’14 to 2.01 in Apr-Nov’15. Whereas imports from Japan increased by 66% from 0.93 MnT in Apr-Nov’14 to 1.54 MnT in Apr-Nov’15.

Indian steel industry has been lobbying hard since long to keep steel out of FTA agreements with Japan & Korea.

Limited Impact of reduction in Duty

Domestic steel market is abuzz with the talks of Minimum Import Price (MIP) likely to be imposed on steel very soon.

Owing to this Indian importers have stalled their import bookings and currently no new offers are being heard from Korea/Japan.

Under MIP a floor price would be decided by the government below which imports would not be allowed in to the country. Duties will be imposed on decided MIP.

Year-wise Import duty on Korean HRC Imports under FTA

Source: SteelMint Research