Indian steel industry faces tensions over import tariff hikes and SME concerns

New Delhi, September 6 (KNN) There is a heated debate in the Indian steel industry about rising import tariffs and possible protectionist trade measures.

On Wednesday, former Karnataka Chief Minister HD Kumaraswamy asked the Finance Ministry to raise import duty on steel to 10-12 percent from the current 7.5 percent.

A day later, Indian Commerce Minister Piyush Goyal floated the idea of ​​a Border Adjustment Tax (BAT) to curb Chinese steel imports, as domestic steel producers expressed concern over “predatory pricing policies.”

Steel producers argue that steel made in India is at a price disadvantage due to local taxes such as electricity, iron ore and coal levies.

Imported steel, especially from countries like China and Vietnam, comes to India at lower prices due to the absence of similar levies. A trade expert stressed that BAT would help level the playing field by offsetting these domestic disadvantages.

However, micro, small and medium enterprises (MSMEs) have expressed concern over these proposals. Vinod Kumar, president of India SME Forum, stressed that Indian MSMEs often depend on imported steel as major steel manufacturers prefer exports due to lucrative incentives. “Increasing import duty will push up input costs by 10-20 percent. How will MSMEs survive?” asked Kumar.

Kumar noted that SMEs typically place smaller orders that are less attractive to large steel producers than large export deals. This reflects a broader systemic problem: SMEs feel overlooked by domestic manufacturers.

S. Hegde, managing partner of Newcom Technologies in Bangalore, warned that additional tariffs on steel imports would plunge SMEs into crisis. “Where will SMEs go if steel becomes unaffordable? Should we stop production completely?” he asked.

Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), noted that while India’s steel producers were trying to protect themselves from cheaper imports, such measures risk pushing up steel prices across the economy.

He stressed that the financial health of the industry needed to be examined more closely to determine whether its problems were solely due to imports.

This debate arises as India became a net importer of steel in FY2024, recording a trade deficit of 1.1 million tonnes. India’s largest exporters include China, South Korea, Japan and Vietnam.

(KNN Office)