Demand to axe steel out of FTA with Japan, Korea gets stronger
The demand for taking steel out of the purview of the free trade pact with Japan and Korea is getting stronger with Essar Steel on Thursday arguing that such a move would be in the interest of the domestic industry.
New Delhi: The demand for taking steel out of the purview of the free trade pact with Japan and Korea is getting stronger with Essar Steel on Thursday arguing that such a move would be in the interest of the domestic industry.
"There is a definite case to exclude steel products from the ambit of the Free Trade Agreement (FTA) with Korea and Japan," Essar Steel Executive Director (strategy & business development) Vikram Amin told reporters.
"Considering the high value addition in steel industry and employment generation potential, it makes immense sense to export steel rather than exporting iron ore and importing steel," he added.
Earlier this week, JSW Steel was the first among domestic steel makers to come out in the open with such a demand saying that taking advantages of the FTA, Japan and Korea are dumping steel products in India at a "very low price" since their own economies were not doing well.
"Japan and Korea are pushing for more steel into India. There is more than 300 percent increase in imports of steel in just one year from these countries. So, the government needs to sit back and take a look at this. Steel should be outside of the FTA purview," JSW Steel Chairman and Managing Director Sajjan Jindal had said.
India signed FTA with Korea in January 2010 and with Japan in August last year. Under FTA, duties on most of the products, traded between the countries, are either eliminated or reduced sharply. Duties in the related cases come to zero levels in phases.
However, according to industry experts, taking out any product from the FTA is possible, but it calls for an intense lobbying with facts and figures for proving the rationale of such a demand. India's steel import stood at 6.83 million tonnes in 2011-12.
According to Joint Plant Committee of the Steel Ministry, imports went up to 2.88 million tonnes during April-July period of the current fiscal as against 1.88 million tonnes in the same period of last year, a growth of over 53 percent.
The domestic steel industry is expecting in excess of eight million tonnes imports in the country during the current fiscal, which is around 10 percent of the total projected demand for 2012-13.
Cashing on the duty benefits, Japan and Korea have also become the leading exporters of steel to India replacing the traditional exporters European Union and Russia. While import duty on Korean and Japanese steel products have been reduced to 3.13 percent from five percent in 2010, imports from other geographies attract 7.5 percent import duty.