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Sub-standard imports impeding domestic steel sector

Influx of defective or sub-standard steel products through imports is posing serious problems to the growth of domestic steel sector, said the Confederation of Indian Industry in New Delhi on Thursday.

According to CII, it is estimated that imports of defective hot rolled coils was 30 per cent of total imports, while in the case of cold rolled coils, it was 40 per cent and that of tinplates was around 80 per cent.

To restrict cheap imports, CII has recommended strengthening of the Indian anti- dumping laws in the steel sector.

The government on its part has made it mandatory for all shipments of defective steel products to comply with the mandatory quality standards, putting them at par with the domestic producers.

Another trend affecting the domestic steel sector is the rising unhindered imports of steel from the CIS countries. To check this unbridled cheap imports of steel the government had fixed floor prices for seven items of finished steel. Anti dumping duty had also been levied on import of HR coils from Russia and Ukraine.

But now that the government is considering a move to remove the floor prices, CII feels that it will prevent the Indian companies from effectively competing with international companies. Moreover, removal of the floor prices could once again attract dumping into the country, added CII.

In light of the stagnating demand from major steel intensive sectors and lack of investment in major infrastructure projects, CII places the overall steel demand to grow at a moderate rate for the next couple of years. The steel demand (based on apparent consumption) had grown at a compounded average growth rate of around 4.3 per cent only during the last five years.

While urging the government to introduce reforms and enhance investment in key consumption sectors, CII has recommended elimination of land market barriers in order to spur residential construction. Land market barriers such as rent control, land ceiling, government ownership of land among others are perceived as the hindering factors to residential construction.

The CII, also feels that ensuring power sector reforms through privatisation and efficient distribution channels would also provide an impetus to the steel demand.

The Indian steel industry accounts for only one per cent of the world trade. Characterised by over-capacities at home, a low per-capita steel consumption (24 kgs as against China's 93 kgs), the challenges before the industry lay in increasing the domestic demand (market growth), boosting exports and reducing costs.

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