Capital Goods Industry Raises Voice against Excessive Protectionism to Steel Sector

Process Plant and Machinery Association of India (PPMAI) and apex body representing the Process Plant Manufacturers in India have written a letter to Prime Minister Narendra Modi against excessive protectionism including MIP imposition. PPMAI includes companies like Larsen & Toubro (L&T), Godrej, Thermax, Praj Industries, Aker Solutions, Toyo Engineering and others.

Mr V P Ramachandran, Secretary of PPMAI, said, “India is in the process of globalizing its manufacturing base through establishment of Capital Equipment and downstream industries in MSME in order to generate employment and boost Make in India vision through competitiveness of Indian products. However, the government must also understand that this goal is endangered if our industrial and trade policies are based on narrow perspectives of ‘Protectionism for One’ individual industry. India should not be seen as a protectionist country with unpredictable policies.”

He further added, if the steel industry is favored with excessive protectionism, it will end up as a burden on the economy and scare away investors in other productive Capital Equipment and downstream MSME areas.

The recent MIP imposition on steel products without discussing with all the stake holders will further create confusion if arbitrary price is fixed and will hit domestic industry if asked to follow prices, stated Mr Ramachandran.

In addition, the government has also inverted the current import duties. This only safeguards the steel industry but hampers the business of downstream value added producers. Thus, the steel industry can face lack of domestic demand if the closure of downstream sector happens in near future. Therefore, the government must look at the big picture and not sacrifice the Capital Goods and MSME sectors.

PPMAI suggested the government to make the duty structure logical and bring down the import duties on semis and intermediates like Hot and Cold rolled carbon steel and stainless steel to the original rate of 5%. If China, Korea and Japan are dumping at low price, start anti-dumping investigations instead of further protection.

For copy of letter to Prime Minister, click here.