New Delhi, Dec 7 : The first half of 2021-22 has seen a 185 per cent increase in stainless steel imports compared to the average monthly imports in the last fiscal, creating havoc for the Indian players.
The import tide of stainless steel from China and Indonesia is fast turning into a deluge destroying many companies on its way, and threatening the very existence of the small, medium and micro industries in India.
The shocking 185% increase in stainless steel flat product imports from China and Indonesia in the first half 2021-22 was due to an increase in Chinese and Indonesian imports.The two countries of China and Indonesia, who increased their exports by 300 percent and 339 percent, respectively, in this half of the fiscal, have now a share of 79% of total stainless steel flat product imports for the first half FY22.
This is a significant increase from the 44% share in FY21.The average per month imports has jumped from 34,105 tonnes per month in FY21 to 63,154 tonnes per month this current fiscal–FY 22.
Indonesia’s imports share, which was virtually non-existent in 2016-17, has climbed to 23 per cent in the first half of this fiscal, with its average monthly exports increasing from 4,355 tonnes/month in the last fiscal to 14,766 tonnes/month in the first half of this fiscal.China’s average monthly exports too has jumped from 10,697 tonnes/month in the last fiscal to 35,269 tonnes/month in the first half of this fiscal.
The surge in imports was the result of the Finance Ministry’s decision of September 30, 2021 to revoke the imposition of CVD on China (September 2017) and end provisional duties on Indonesia (October 2020), which was based on the recommendations of the Director-General of Trade Remedies (DGTR), after a detailed investigation.The investigation had revealed that the two countries were resorting to non-WTO compliant subsidies to boost their exports to India and causing injury to Indian manufacturers.
In fact, the DGTR and their global counterparts had conclusively proved in its final finding that both these countries provide non-WTO compliant subsidies to the tune of 20 per cent to 30 per cent to their stainless steel manufacturers.These subsidies have caused an imbalance in the Indian and global markets, reduced the competition of Indian products in their domestic industry, and created financial stress for home-grown companies.
It has forced the domestic industry to seek redressal from the surge in imports.
In fact, in India a disaggregated study of imported products in the first half of the current fiscal also reveals how excessive dumping has taken place in a particular J3 grade of stainless steel in the country.
The imports of J3, a sub- and dumped 200 series stainless steel grade, have increased from an average 1,779 tonnes per month in 2019 to an average 4,425 tonnes per month in 20-21 (249 percent increase) and to an average 25,346 tons to in just six years (2021-22 (1,424%), compared to the same time last year.
This grade accounted for 23% of total imports from China in 2019-20 and 72% in 2021-22.
This import is often below scrap prices, which hurts the MSME sector the most.Such dumping also means major losses in terms of national exchequer through tax evasion and revenue losses.
This onslaught of Chinese exports to India has decimated the micro, small and medium enterprises (MSME), which had to bear the brunt of the impact.The imposition of provisional CVD (on Indonesia) in October 2020 and CVD (on China) in September 2017 had provided a level playing field to these players, who received a much-needed break from the subsidised dumped imports.The MSME, an industry having the capacity to produce about 1.2 lakh tonnes of hot and cold-rolled flat products, was able to operate at 90 per cent plus capacity utilization between October 2020 to February 2021.
However, the MSME sector suddenly finds itself grasping for breath to survive after the announcements of the 2021-22 Budget.Small-scale stainless- steel rollers and re-rollers, who make ingots from recyclable scrap as the first step in stainless- steel product manufacturing, and then produce hot and cold rolled materials for the all-India market, find themselves swamped by a massive and subsidised surge of imports from China and Indonesia.
Today, more than 80 induction furnaces and 500 patti/patta units, which provides primary raw materials for various downstream industries, are in dire straits.These downstream industries produce a variety stainless steel household goods, including kitchenware, tableware and cutlery pots.
Prakash Jain is the President of All India Stainless Steel Cold Roller Association.He stated that “smaller Indian stainless steel producers find it nearly impossible to compete against the state-subsidised Chinese companies, who get an 18.% incentive to export, under invoicing their products by changing label to avoid paying duties, and sell it at Rs 15-17 per tonne less in the Indian market.”
According to Jain, Gujarat has 70 rolling mills, each employing around 300 people and 50 induction furnaces, which makes ingots, the raw material for rolling mills and employs 500 each.Many of these jobs will be lost, resulting in huge unemployment and forcing many manufacturers to become traders if the CVD is imposed upon imports from China or Indonesia.
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