The Indian Stainless Steel Development Association has called for an increase in basic customs duty rates on stainless steel flanges products to 15 per cent from the existing 5 per cent. They also want removal of customs duty on key raw materials and on scrap to provide an impetus to the fledgling domestic industry.
In a pre-Budget memorandum, the association has said the domestic stainless steel makers are under threat from Chinese imports. The association says that the low customs duty in India has resulted in imports increasing to 307,226 tonnes in 2013-14 from 239,136 tonnes in 2011-12. China accounted for one-third of the total imports in 2013-14.
The association states that Indian manufacturers depend on imported coking coal and suffer from borrowing costs in the region of 12 to 13 per cent, which is impacting their price competitiveness against Chinese imports.
“China’s capacity of stainless steel has grown at a radical pace, outgrowing its demand and resulting in excess production,” the association said in a statement. “It is this excess produce that finds its way to Indian markets creating an imbalance and destroying the level playing field. In 2013 alone, China has created an over supply of 1.84 million tonnes.”
According to the ISSDA, India’s stainless steel consumption is expected to grow to 3.5 million tonnes by 2015.
As a result of cheaper imports and a slowdown in the economy, domestic manufacturers have struggled. Jindal Stainless Ltd, one of the largest stainless steel manufacturers in the country has accumulated losses of 2,314.72 crore in fiscal years 2013-14, 2012-13 and 2011-12. The last time the company had reported an annual net profit was in the 2010-11 fiscal when it had a profit of 318.34 crore.
The fiscal 2013-14 has been particularly bad for Jindal Stainless with over 1,200 crore being eroded from its net worth. As on March 31, 2014, the company’s consolidated net worth stood at 61.97 crore as against 1,339.56 crore on March 31, 2013.