Centre weighs reimposition of 10% CVD on import of long steel items

CVD HAS BEEN FAVOURED AS DOMESTIC PRICES OF LONG PRODUCTS HAVE FALLEN 35% SINCE APRIL

THE government is considering reimposition of 10% countervailing duty (CVD) on bars and structurals to safeguard the interests of domestic steel companies in the wake of rising imports. Bars and structurals are long steel products mainly used in construction work.
    The move would come as a breather for steel makers such as Tata Steel, RINL, SAIL and Jindal Steel and Power (JSPL), who have been feeling the pinch of increased imports of long products over the last couple of months. "The proposal to reimpose CVD is being considered by the finance ministry. It may be included as part of a new fiscal package being considered for the sector," a government official said.
    Last week, steel minister Ram Vilas Paswan also wrote to Prime Minister Manmohan Singh asking for CVD on bars and structurals considering the current import scenario. The CVD on bars and structurals was withdrawn earlier this year when steel prices were rising. The duty waiver was aimed at protecting needs of the domestic construction sector and controlling inflation.
    The CVD has now been favoured as prices of long products have fallen 35% to Rs 32,000-34,000 per tonne level this month as against Rs 48,000-50,000 per tonne in April this year. The absence of the duty puts domestic manufacturers at a disadvantage. In a market where prices are falling, imports become attractive as they are not charged 10% excise duty which domestic companies have to pay. Moreover, with international prices being lower than the domestic prices, there is a fear that even long products may be dumped in the country.
    Says JSPL director Sushil Maroo, "We have been urging the government for CVD on long products for sometime now, considering the price situation. The move will not only protect the local industry against cheap imports but also generate decent revenues for the government. Giving a boost to the domestic industry would mean creation of more job opportunities."
    "Earlier, the US was a major export market for China. With slowdown in demand from the US, Chinese steel producers shifted their focus to India. The CVD would primarily benefit small players as imports would become expensive," says independent steel and natural resources consultant AS Firoz.
    India's annual steel production stands at 56 million tonnes with long products constituting close to 50% and flat products 50%. However, the share of long products in the country's total imports stands at a mere 25%. For the April-November period, total steel imports stood at 6.65 mt.
    Globally, steel prices have more than halved to $600-700 per tonne level after touching a level of $1,400 per tonne earlier this year. Even domestic steel prices have fallen by over 30% in last three months due to slowing demand.
    subhash.narayan@timesgroup.com