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There have been consistent efforts to integrate India with the global supply chain and reduce tariffs to the global average, but pressure to raise tariffs keeps emerging and so it needs to be looked at why India industry is not competitive enough, Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Amardeep Singh Bhatia said on Wednesday.
Bhatia’s comment comes at a time when large steel producers are pressing the government to significantly raise tariffs on steel. The Steel Ministry has asked the Commerce and Industry Ministry to raise tariffs on steel imports by as much as 25 per cent, citing a sharp surge in steel imports from countries with which India has signed free trade agreements (FTAs).
However, Micro, Small & Medium Enterprises (MSMEs) have warned that such a step would harm the downstream industry, potentially driving them out of business due to an increase in steel prices. Notably, imported steel is much cheaper than domestic steel, raising concerns over competitiveness.
“On the export market and integration with the supply chains, a lot of work has been done in terms of reducing tariffs. The weighted average tariff has come down substantially and is almost at the world average level. But, of course, there is pressure to increase it, and we need to look at why these requests keep coming up. Why are we not competitive enough?” Bhatia said while addressing the CII Global Economic Policy Summit.
Indian steel companies are grappling with several challenges in international markets, leading to a sharp decline in exports and a significant rise in steel imports into India. During the first half of the ongoing financial year, steel imports into India surged by approximately 41 per cent, while exports declined by 36 per cent, official data showed.
Moreover, there are risks of increased steel tariffs in the US, as US President-elect Donald Trump has signalled potential fresh tariffs on imported steel to safeguard the American steel industry. Trump said he would even block Nippon Steel, a Japanese company, from acquiring the Pennsylvania-based steel manufacturer, US Steel.
Bhatia further said that around 45 per cent of Indian startups are emerging from tier two and tier three cities, adding that sector-specific interventions are being developed to deepen the startup movement.
“We have established a robust startup ecosystem that is no longer confined to small pockets but is spreading across the country. In fact, 45 per cent of our startups are from tier two and tier three cities, which is very encouraging. Sector-specific interventions are being designed to further expand this movement,” Bhatia said.
He added that free trade agreements (FTAs) are being negotiated, offering Indian businesses new opportunities following supply chain disruptions caused by the COVID-19 pandemic.
Bhatia said that substantial improvements in India’s industrial infrastructure, including the development of industrial parks, and pointed out the need to optimise land use to make industrial land more accessible. He also mentioned that the reduction in logistics costs and the Production Linked Incentive (PLI) scheme have enhanced the competitiveness of Indian manufacturing.
“Industry must provide the long-term vision and work together with the government to make India a manufacturing hub that not only serves domestic needs but becomes a key player in global markets,” he said.
Separately, Sumita Dawra, Secretary, Ministry of Labour & Employment, said that by 2030, India’s working-age population will constitute about 65 per cent of the total population, positioning India as a key player in addressing global labour shortages.
Dawra said that since 2017, over 7 crore Indians have joined the Employees’ Provident Fund Organisation (EPFO), and the government is undertaking initiatives to enhance employability and skill sets of the workforce.
Urging the industry to leverage the Employment Linked Incentive (ELI) Scheme, she said that ELI is designed to incentivise the hiring of additional workers, particularly in the manufacturing sector, by offsetting the cost of employing new workers. The scheme aims to boost labour formalisation, enhance the employability of workers, and support job creation in key manufacturing industries.
“India’s manufacturing competence is built on cost efficiency, a skilled workforce, and government support. With continued investment in key sectors, we will further enhance our global positioning. The industry should leverage new technologies, policies, and practices to make India a manufacturing powerhouse in the future,” Dawra said.
