The Ministry of Finance has announced a five-year extension of the anti-subsidy duty on imports of welded steel pipes and tubes from China and Vietnam. The move could benefit Indian steel companies, creating a level playing field.
The extension of the anti-subsidy duty, imposed first in September 2019, was announced on Tuesday. It came into effect as several industry associations had complained that steel products were being exported to India at prices below their production costs, due to subsidies harming growth in the Indian steel industry.
Indian steel companies, like Tata Steel Ltd., JSW Steel Ltd., Welspun Corp., and Ratnamani Metals & Tubes Ltd., stand to benefit from this move.
Anti-Subsidy Duty
An anti-subsidy duty is a type of tariff imposed on imported goods that are believed to be subsidised by the exporting country's government. It is intended to protect domestic industries from unfair competition.
Rising Imports
Rising steel imports from Southeast Asian countries have been hurting the Indian domestic steel industry. Despite India being the second largest steel producer in the world, the country became a net importer of steel in fiscal 2024, with an overall steel trade deficit of 1.1 million tonnes. Latest Ministry of Steel data shows the same trend during April-July 2024, where India's steel trade deficit stood at 0.11 million tonne.
While countries like China, South Korea, and Japan have remained the top exporters in the space, Vietnam has also emerged as a key player on the list. Ministry of Commerce data shows that in the first seven months of calendar year 2024, imports from China grew 10% year-on-year at $60 billion, while imports from Vietnam grew 17% year-on-year at $5.8 billion.
How Do Indian Steel Companies Benefit?
Steel business in India has been hurt due to the rising imports of steel goods from China and Vietnam. With higher tariffs on these imports, Chinese and Vietnamese products could become less competitive in the Indian market, allowing Indian steel companies to increase their market share and sell more of their products domestically.
The anti-subsidy duty helps protect Indian steel companies from unfair trade practices, such as dumping, wherein foreign products are sold below their cost of production. This could ensure that Indian companies can compete on a level playing field.
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