Also, investigation launched by the government, following the allegations of illegal money transfers in case of steel imports under MIP mechanism.
In a recent update in MIP case on steel imports announced in Feb’16, its review was due after two months i.e in Apr’16, in order to study its impact on imports.
As a measure to curb influx of cheaper steel imports into India, Indian government imposed MIP on 173 steel products, including billets, ingots and flat products on 5 Feb’16. MIP is setting of minimum prices below which goods cannot be imported in to India. The MIP announced is in the range of USD 341-752/MT.
Post MIP, Indian steel manufacturers have increased domestic flat product prices effectively by INR 5,500-6,000/MT within the time span of just two months. Thus, this MIP revision will also help the government to analyse whether price hike by the manufacturers have been reasonable or not and how much it has impacted the downstream industry.
As per market sources, the review meeting is likely to be attended by senior officials from Ministry of Steel and Commerce, CBEC (Central Board of Customs & Excise) and part of department of revenue under finance ministry.
As per provisional customs data, India’s flat steel imports under HS code 7208, 7209, and 7225 (upon which MIP has been announced) increased by 35% in FY16 against previous fiscal and stood at 7.34 MnT.
Post MIP, Feb and Mar months did not observe any significant contraction in flat steel imports. However as the lead time for any import shipment to reach India is about 1.5 to 2 months; MIP impact can only be seen in import numbers of April month and thereafter.
Investigation on illegal money transfers due to MIP
Following allegations of false invoicing and illegal transfer of funds due to MIP, the government has launched its investigation on the same.
Elaborating on the same, it is alleged that importers in India are over-invoicing their shipments and importing steel at or above MIP price. Later on the difference between the actual sale price and MIP is being remitted by the exporter into an account held by Indian importer in a foreign country.
Thus, the country’s revenue, intelligence, and enforcement directorate officials will scrutinize all the transactions in order to find out any violations in case of steel imports under MIP mechanism.
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