DGFT (Directorate General of Foreign Trade) confirms SteelMint that steel cannot be imported to India below the Minimum Import Price (MIP) fixed by the government. Also, the duty will be paid on the fixed MIP.
After the Indian government announced MIP on 173 steel products on 5 Feb’ 16, a complete chaos is created in Indian steel circuit. Market participants are in a dilemma whether imports will be allowed at the MIP announced by the government or only duty differential have to be paid on fixed MIP and import offers. Thus in order to clear this confusion, SteelMint had a word with DGFT officials and it was confirmed from them that imports would not be allowed to India below fixed MIP. This is explained in the example below:
For example, if MIP for HRC is fixed by the government at USD 445/MT, an importer will have to book imports at the rate of USD 445/MT and also safeguard duty, customs duty, countervailing duty and all other duties required to calculate the landed cost of imports will have to be paid on USD 445/MT.
There is a difference between MIP (Minimum Import Price) and MFP (Minimum Floor Price)
MIP is a price fixed by the government below which imports would not be allowed into India and all the duties have to be calculated on fixed MIP. For an instance, if MIP for HRC is decided at USD 445/MT, importer has to pay USD 445/MT and all the duties will also have to be calculated at USD 445/MT.
MFP is a price which means although imports will be allowed at current global rates, all the duties have to be calculated on the fixed MFP. For an example, if MFP for HRC is decided at USD 450/MT and current offers from China are assessed at USD 300/MT, an importer can import HRC at USD 300/MT from China. However, he has to pay customs duty, countervailing duty and safeguard duty on USD 450/MT.
Safeguard duty predicament
The 200 days time period of provisional safeguard duty of 20% on HRC announced by Indian government is likely to get over by February end. Thus, whether this duty will continue beyond Feb’16 or not is likely to decide by the government shortly. Before that, the safeguard duty of 20% will be applicable on HRC to be imported to India on the fixed MIP.
Indian steel imports down
According to govt data, imports in Jan’16 decreased by 8.7% compared to Jan’15. However, imports of total finished steel were 9.306 MnT during Apr’15-Jan’16; registered a growth of 24.1% compared to the same period of last year.
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