New Delhi, September 5 India is open to exploring countervailing taxes and duties, akin to EU’s carbon border adjustment mechanism (CBAM), on steel imports that will look at providing domestic mills a cushion against rising instances of alleged dumping and incoming shipments “from foreign countries”.
The adjustment mechanism will explore options where taxes and duties, including cess not subsumed in GST, will be calculated and remitted back to the domestic industry or added to the price of imported steel. This will also include state levies. Imported steel or metal offerings coming into India from FTA countries do not include such additional levies.
On an average, around 12 per cent of the cost of steel sold in India includes such additional taxes and cess which are not subsumed. For instance, for domestic hot rolled coils priced at $450 per tonne (excluding freight), the quantum of such additional levies are to tune of $50–54 per tonne.
Going forward, the plan, according to Union Commerce and Industry Minister, Piyush Goyal, is to include such levies on imported steel, including from counties with which India has an FTA.
Domestic steel prices continue to be higher than imported price of the metal. Consultancy firm, BigMint said, trade-level domestic HRC prices fell to ₹49,000 per tonne; while the prices from FTA countries were at ₹48,900, and the Chinese tags were even lower at ₹48,400 per tonne.
“Border adjustment tax is WTO compliant, and if all industry bodies like FICCI, CII, ASSOCHAM, etc, talk it out, we may be in a position to get traction and get it into the country,” the Minister said while addressing an Indian Steel Association (ISA) conclave.
The Minister asked some of the industry captains, including from SAIL and the apex steel association — ISA, to meet him and take forward the discussions on such border adjustment mechanism, “so that there is a level playing field”.
“I think there is another important subject that I have made a lot of effort on in the past, but could not succeed… on the Border Adjustment Tax. The electricity duty, iron ore duties and so on which you (the steel sector) pay, are included in the export price. Imports, including from free trade agreement countries will have similar taxes like cess on coal, royalty premium, electricity duty, etc that you are not getting remitted… which are not charged in other countries… can be adjusted through the border adjustment taxation mechanism,” Goyal said.
The Minister acknowledged that although remittances were proposed under the RoDTEP (Remission of Duties and Taxes on Export Products), these have not happened on expected lines due to “shortage of funds”.
“We have not signed any FTA without 100 per cent concurrence from the steel industry,” Goyal said.
Navin Jindal Speaks for Steel Industry
Incidentally, Naveen Jindal, President of the ISA and BJP MP, during his interaction with Goyal had pointed out that the country’s steel industry has been facing concerns over rising imports that include metal offerings coming in from FTA countries at predatory prices.
Chinese mills have gone ahead to invest in other South East Asian countries — which are at times even double the existing consumption in these markets — with the aim of exporting to India.
“Even if one per cent of those offerings come in India (at predatory prices) it is damaging the Indian markets,” he said. Jindal is also the Chairman of JSPL, one of the top five steel-makers in India.