The Engineering Export Promotion Council of India (EEPC) has warned that imposing restrictions on steel imports could adversely affect Indian engineering goods manufacturers and exporters, particularly Micro, Small, and Medium Enterprises (MSMEs). Arun Kumar Garodia, Chairman, EEPC, emphasised that these enterprises rely on competitive steel prices to sustain their operations. 

This warning comes as large Indian steel manufacturers have urged the government to double tariffs on steel imports to 15% in a bid to shield domestic steel production from increasing imports, particularly from China. Similar requests have been made by U.S. and European steel producers amid a global surge in Chinese steel exports. 

However, smaller engineering exporters contend that steel imports are not solely rising from China. They highlight a significant price gap between domestic and Chinese steel, with lower-priced imported steel enabling MSMEs to maintain competitiveness. “It is crucial to keep domestic steel prices competitive. The price differential between Chinese steel and Indian-produced steel is substantial, allowing downstream industries, especially MSMEs, to remain viable in both domestic and international markets,” Garodia stated.

According to EEPC, during the first five months of the current financial year (2024-25), India's crude steel production rose by 4.44%, while finished steel production grew by 5.30% compared to the previous year. In contrast, steel consumption saw a significant increase of 13.78%. This disparity between production and consumption underscores the necessity of imports to satisfy the rising domestic demand.

Garodia further noted that EEPC has urged the government to avoid imposing additional duties or safeguard measures to restrict steel imports, as such actions could severely impact the engineering goods sector. "Since steel is a critical input for most engineering companies, any price increase could diminish competitiveness and elevate operational costs,” he added.

Citing data from the Joint Plant Committee (JPC), EEPC reported a 31.7% increase in finished steel imports from China. However, it pointed out that this trend is not exclusive to China, with imports from Japan rising by 130%, from Vietnam by 52%, and from Korea by 6%. Despite the increase in import volumes from China, its share of total imports has slightly decreased from 31% to 30.5%, while Japan's share has increased from 14.3% to 24.6%. EEPC suggested that the broader rise in imports, especially from India's free trade agreement (FTA) partners, may require a reevaluation of the rules of origin criteria under these FTAs.

(Indian Express)