Imposition of additional duty on steel imports to hit exports by MSMEs: Exporters

New Delhi: MSME exporters from the engineering sector on Tuesday said that any move to impose additional duties on steel imports would make domestic products uncompetitive and impact the country's outbound shipments from the sector.

Hand Tool Association Chairman S C Ralhan said that the MSME engineering exporters are already facing problems on the liquidity front and high prices of steel in the domestic market.

"Increasing prices of steel by domestic steel makers are hurting us and now we have seen in the media reports that the government is planning to impose a 25 per cent safeguard duty. This will severely impact MSME exporters," Ralhan said.

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that if the government imposes additional duty, they should ensure that the domestic steel companies do not increase the prices of the inputs.

"Increase in input prices will impact exports of value-added steel products," Sahai said.

The steel ministry has proposed for a 25 per cent safeguard duty on import of certain steel items into the country. The proposal came at a meeting between Union Minister of Steel H D Kumaraswamy and Commerce and Industry Minister Piyush Goyal here on December 2.

Domestic steel players are raising concerns over rising cheap steel imports from select nations like China.

Think tank Global Trade Research Initiative (GTRI) in its report has claimed that thousands of containers carrying imported steel remain stranded at JNPT and other ports due to complex clearance procedures imposed by the Ministry of Steel (MOS).

"The Customs clearance delays have disrupted production lines and tarnished India's global reputation, with even countries like Japan formally requesting the government to release stranded shipments," GTRI said.

India's steel imports are neither excessive nor unwarranted, GTRI Founder Ajay Srivastava said, adding half of these imports are critical raw materials for domestic production, while 40 per cent consist of specialised items that India does not produce in sufficient quantities.

He said that steel imports are just 6 per cent of domestic production and an estimated over 70 per cent imports are done by large steel firms.

An impression has been created that India's steel imports are high, lack quality and supplied at below market prices and hence need iron clad controls and data does not support high import theory, Srivastava said.

"In FY2024, domestic production met 94 per cent of India's steel demand, with imports contributing just 6 per cent. Over half of these imports consist of steel scrap (33.8 per cent) and semi-finished steel (17.3 per cent), both of which support domestic steel production. Such imports are made by large steel producers," he added.

The remaining 43.4 per cent imports are of high-end flat-rolled steel products used in critical industries like automotive, construction, and household appliances.

"Domestic stainless steel prices are 25-30 per cent higher than comparable imported steel for certain thicknesses, even after accounting for duties.

This price disparity, driven by import restrictions, significantly boosts the profit margins of large steel firms while small and medium enterprises (SMEs) bear the brunt," the think tank said.