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Restricting steel imports from China and other countries could severely impact Indian engineering goods manufacturers and exporters, especially Micro, Small, and Medium Enterprises (MSMEs), as they rely on competitive steel prices to maintain their operational viability, Arun Kumar Garodia, Chairman of the Engineering Export Promotion Council of India (EEPC) has said.
This comes at a time when large Indian steel manufacturers have asked the government to double tariffs on steel imports to 15 per cent to protect domestic steel production from rising imports from China. Similar demands have been made by US and European steel producers amidst a surge in Chinese steel exports globally.
However, small engineering exporters argue that steel imports are not rising from China alone and that there is a significant price gap between domestic and Chinese steel, with cheaper imported steel enabling MSMEs to remain competitive.
“It is imperative to keep domestic steel prices competitive. The price differential between Chinese steel and Indian-produced steel is significant. This price advantage enables downstream industries, particularly MSMEs, to remain competitive in both domestic and global markets,” Arun Kumar Garodia, Chairman of EEPC India said.
“During the first five months of the current financial year 2024-25, India’s crude steel production increased by 4.44 per cent, while finished steel production grew by 5.30 per cent compared to last year. Meanwhile, steel consumption rose by a substantial 13.78 per cent. This notable gap between production and consumption highlights the need for imports to meet the growing domestic demand,” EEPC said in a statement.
Garodia said that EEPC has requested the government refrain from imposing additional duties or safeguard measures to curb steel imports, as such a move could severely impact the engineering goods sector. “As steel is one of the key inputs for most engineering companies, any increase in its price could lead to reduced competitiveness and higher operational expenses,” Garodia said.
Citing data from the Joint Plant Committee (JPC), EEPC noted that imports of finished steel from China have increased, showing a growth of 31.7 per cent.
“However, it is important to note that this trend is not limited to China. Imports from Japan have surged by 130 per cent, from Vietnam by 52 per cent, and from Korea by 6 per cent,” EEPC said.
Additionally, while the volume of imports from China has grown, the share of total imports from China has slightly declined from 31 per cent to 30.5 per cent. In contrast, Japan’s share of imports has risen from 14.3 per cent to 24.6 per cent. This broader increase in imports, particularly from India’s free trade agreement (FTA) partners, may necessitate a closer examination of the rules of origin criteria under these FTAs, EEPC said.
