India discusses protecting small steel consumers from safeguard duties

The Indian government is discussing ways to protect the steel-using micro, small and medium-sized enterprises (MSMEs) sector from the impact of rising domestic prices in the event of a protective import duty on steel products. This is reported by SteelOrbis.

According to the sources, the relevant ministries are working to offer steel consumers in the latter segment a window or support system so that they can continue to access steel for production activities at competitive prices, just as they currently import steel products at a lower cost.

One of the support options being considered by the Ministry of Trade is to oblige domestic steel mills to supply MSMEs at a price linked to the export price.

The second option is to instruct local metallurgists to select certain steel grades that are in demand by MSMEs, and their price will be linked to the import price, minus a 25 percent safeguard duty. This way, small consumers will have access to local steel at a parity price with imports.

However, sources acknowledge that it will be difficult to develop a mechanism that would provide MSME steel buyers with a lower price while ensuring that this material is not sold on the market.

An option would be to certify MSME producers as to the actual end use of the steel, but even in this case, it is unlikely to provide 100% protection against leakage.

As GMK Center reported earlier, India is discussing the introduction of a temporary safeguard duty on steel imports of up to 25% to limit the flow of cheap products from China.

At the end of last year, to ease the fears of small and medium-sized enterprises, major steel companies, including JSW Steel, Tata Steel and ArcelorMittal Nippon Steel India, agreed to supply them with steel at reduced prices.