Of the 173 products, MIP will be on 66 products and rest of the products will come under anti-dumping duty, which has been in place for 5 years, says Aruna Sharma, Steel Secretary.
The government on Thursday extended the minimum import price (MIP) only on 66 steel products till October 4. The earlier MIP, which was on 173 products, ended on August 5.
The MIP is on imports from 6 countries namely Japan, Korea, Russia, Indonesia, China and Brazil and will protect the industry against cheap imports.
Of the 173 products, MIP will be on 66 products and rest of the products will come under anti-dumping duty, which has been in place for 5 years, says Aruna Sharma, Steel Secretary.
MIP is a short-term solution only, she adds.
While the World Trade Organization (WTO), which does not favour MIP, might raise objections, the extension was needed to uplift the Indian industry.
The idea behind two months MIP extension is to ease all products under anti-dumping duty in the future, Sharma says adding that the anti-dumping levy will be on difference between the production cost and landing cost.
Below is the transcript of Aruna Sharma’s interview to Latha Venkatesh and Nigel D’souza on CNBC-TV18.
Latha: If you could just reiterate whether we have understood it right. Originally, we had a 173 products, which were under minimum import price (MIP). Now for 66, it has been re-imposed up to October 4. For the remaining 107, you have either safeguard duty or anti-dumping duty in place?
A: For the remaining, anti-dumping duty is completely in place against six countries. So on the request of the Steel Ministry, all the 173 and along with that two more were added and were sent to the Commerce Ministry. In the longer way, it is always better to go for the anti-dumping route, instead of MIP. MIP is always a short-term measure and it cannot be a long-term permanent. So, anti-dumping duty is going to be for five years on those products.
Latha: So, this anti-dumping duty, you say, has to be still signed and delivered.
A: No, it has been given provisional. So provisional comes into effect and the moment the formalities are over, it immediately comes into effect from the day MIP ends, the day it has been announced. So, there is no issue on that.
Latha: And this 66, as you said, MIP is always very difficult to defend with the World Trade Organisation (WTO), are you sure this 66 will not be objected to by other countries? They are in place till October 4?
A: Presently, we have extended it till October 4. There will be definitely issues on that, but then as we go along with it, we will have a very strong logic because the extension was needed at this moment of time as the Indian steel industry has to be competitive with the world rates, but then they cannot be subjected to the various kind of subsidies extended by other countries in the form of dumping.
So, therefore the anti-dumping has been revoked into one part of it and the other part of it which for two months we have got, this two months gives us enough breather to work out on details and slowly get into the regime of anti-dumping.
Nigel: Just wanted to get that point forward. The MIP will be levied from today itself?
A: Yes, from today for two months. That is till October 4.
Nigel: And on these 66 products, is it a move towards anti-dumping?
A: 66 which were not in the anti-dumping which we have issued on 29th itself by the Director General of Safeguards. So, in a sense, the entire 173 is covered.
Nigel: And for the 66 products, it is a move towards anti-dumping duty?
A: It will be a gradual move and we will have to do the homework on it. The next challenge is that revoking anti-dumping duty on the various products, that procedure the Ministry of Steel and the Ministry of Commerce will be working together to make it more simple and affective.
Latha: Is the industry very sure that they are competitive with all other countries other than these six? The anti dumping is on China, Japan, Korea, Russia, Brazil and Indonesia. Outside these six you are pretty sure our products are competitive?
A: No, it goes like this. Our products are completely competitive unless and until these countries resort to dumping. So, other countries, in case they are resorting to dumping, they can always get the resort from the MIP because MIP notification says that wherever anti-dumping is not there, it will be eligible. So, the balance countries, in case they are going for it, it can be an advantage.
Nigel: I wanted to push that point forward, because we have seen imports coming in from Vietnam, Indonesia, Malaysia. It is only around 3 percent currently, but suppose it comes in from there then what are the duties that would be applicable?
A: Absolutely no issue. In case they are resorting to the dumping procedure by giving an indirect subsidy into what their production rate or their landing rate is then there is a mechanism under MIP where it can be resorted to.
Nigel: Could you explain it to us? The street has been waiting for a lot of clarity. We have been speaking to a lot of ferrous players as well. How will this anti-dumping duty be levied? It is fixed at around USD 474 per tonne for example for hot rolled coils (HRC). The current Chinese price is at around USD 400 per tonne. Can you explain to us? Will it be 400 plus 12.5 percent plus safeguard duty or is it the difference between USD 474 per tonne and USD 400 per tonne?
A: Absolutely. We have to understand what dumping means. Dumping means that if their landing cost is x and they are sending it at x minus something, that minus something comes under the anti-dumping. So, whatever is their landing cost in India, at that rate if they are rating it for imports within India and exports for that country then that differential cost in case they are putting. So, suppose their production cost is USD 500 per tonne and their landing cost in India, they are putting it as USD 300 per tonne, then that USD 200 comes under the anti-dumping.
Nigel: But where does this USD 474 per tonne figure come? If you take this same example, USD 474 per tonne is the anti-dumping duty.
A: To that extent, what it means is to that extent, because that is an arithmetic that has been calculated, that is the production cost or a logical cost for which it should be coming. So, that arithmetic whatever is the difference. In case it is competitive and they are landing it at their rate and their production cost is low and their transport is low and in India it lands at a lesser rate, there is no issue. But if it is higher and they are landing it at a lesser rate only then dumping comes into play.
Nigel: If we could just take that point forward. The current price of HRC is USD 400 per tonne. That is the cost, insurance and freight (CIF) China, you are saying that the anti-dumping duty is USD 474 per tonne. So, will it be USD 474 minus USD 400?
A: That will be case by case, at that moment of time. That is upper cap to which it can go.
Nigel: And what about the 12.5 percent customs duty? That is calculated on what?
A: That will all be at the cost of landing. Those formulas do not get affected here.
Nigel: There is so much of talk about MIP coming in and we have anti-dumping duty as well which has come in which will protect the industry, but the biggest company, Steel Authority of India Limited (SAIL) has been undercutting prices and that is what has been spoiling prices currently. Is there some kind of measure that we are taking to see that SAIL improves their efficiency, they stop reducing prices. I am also told that there is some retrospective pricing that SAIL is following currently.
A: It is very important. SAIL is also in business, they are not supported by government in any way. So, they will have to take their business decisions which are fair, which are competitive and which are there in the market.
The MIP is on imports from 6 countries namely Japan, Korea, Russia, Indonesia, China and Brazil and will protect the industry against cheap imports.
Of the 173 products, MIP will be on 66 products and rest of the products will come under anti-dumping duty, which has been in place for 5 years, says Aruna Sharma, Steel Secretary.
MIP is a short-term solution only, she adds.
While the World Trade Organization (WTO), which does not favour MIP, might raise objections, the extension was needed to uplift the Indian industry.
The idea behind two months MIP extension is to ease all products under anti-dumping duty in the future, Sharma says adding that the anti-dumping levy will be on difference between the production cost and landing cost.
Below is the transcript of Aruna Sharma’s interview to Latha Venkatesh and Nigel D’souza on CNBC-TV18.
Latha: If you could just reiterate whether we have understood it right. Originally, we had a 173 products, which were under minimum import price (MIP). Now for 66, it has been re-imposed up to October 4. For the remaining 107, you have either safeguard duty or anti-dumping duty in place?
A: For the remaining, anti-dumping duty is completely in place against six countries. So on the request of the Steel Ministry, all the 173 and along with that two more were added and were sent to the Commerce Ministry. In the longer way, it is always better to go for the anti-dumping route, instead of MIP. MIP is always a short-term measure and it cannot be a long-term permanent. So, anti-dumping duty is going to be for five years on those products.
Latha: So, this anti-dumping duty, you say, has to be still signed and delivered.
A: No, it has been given provisional. So provisional comes into effect and the moment the formalities are over, it immediately comes into effect from the day MIP ends, the day it has been announced. So, there is no issue on that.
Latha: And this 66, as you said, MIP is always very difficult to defend with the World Trade Organisation (WTO), are you sure this 66 will not be objected to by other countries? They are in place till October 4?
A: Presently, we have extended it till October 4. There will be definitely issues on that, but then as we go along with it, we will have a very strong logic because the extension was needed at this moment of time as the Indian steel industry has to be competitive with the world rates, but then they cannot be subjected to the various kind of subsidies extended by other countries in the form of dumping.
So, therefore the anti-dumping has been revoked into one part of it and the other part of it which for two months we have got, this two months gives us enough breather to work out on details and slowly get into the regime of anti-dumping.
Nigel: Just wanted to get that point forward. The MIP will be levied from today itself?
A: Yes, from today for two months. That is till October 4.
Nigel: And on these 66 products, is it a move towards anti-dumping?
A: 66 which were not in the anti-dumping which we have issued on 29th itself by the Director General of Safeguards. So, in a sense, the entire 173 is covered.
Nigel: And for the 66 products, it is a move towards anti-dumping duty?
A: It will be a gradual move and we will have to do the homework on it. The next challenge is that revoking anti-dumping duty on the various products, that procedure the Ministry of Steel and the Ministry of Commerce will be working together to make it more simple and affective.
Latha: Is the industry very sure that they are competitive with all other countries other than these six? The anti dumping is on China, Japan, Korea, Russia, Brazil and Indonesia. Outside these six you are pretty sure our products are competitive?
A: No, it goes like this. Our products are completely competitive unless and until these countries resort to dumping. So, other countries, in case they are resorting to dumping, they can always get the resort from the MIP because MIP notification says that wherever anti-dumping is not there, it will be eligible. So, the balance countries, in case they are going for it, it can be an advantage.
Nigel: I wanted to push that point forward, because we have seen imports coming in from Vietnam, Indonesia, Malaysia. It is only around 3 percent currently, but suppose it comes in from there then what are the duties that would be applicable?
A: Absolutely no issue. In case they are resorting to the dumping procedure by giving an indirect subsidy into what their production rate or their landing rate is then there is a mechanism under MIP where it can be resorted to.
Nigel: Could you explain it to us? The street has been waiting for a lot of clarity. We have been speaking to a lot of ferrous players as well. How will this anti-dumping duty be levied? It is fixed at around USD 474 per tonne for example for hot rolled coils (HRC). The current Chinese price is at around USD 400 per tonne. Can you explain to us? Will it be 400 plus 12.5 percent plus safeguard duty or is it the difference between USD 474 per tonne and USD 400 per tonne?
A: Absolutely. We have to understand what dumping means. Dumping means that if their landing cost is x and they are sending it at x minus something, that minus something comes under the anti-dumping. So, whatever is their landing cost in India, at that rate if they are rating it for imports within India and exports for that country then that differential cost in case they are putting. So, suppose their production cost is USD 500 per tonne and their landing cost in India, they are putting it as USD 300 per tonne, then that USD 200 comes under the anti-dumping.
Nigel: But where does this USD 474 per tonne figure come? If you take this same example, USD 474 per tonne is the anti-dumping duty.
A: To that extent, what it means is to that extent, because that is an arithmetic that has been calculated, that is the production cost or a logical cost for which it should be coming. So, that arithmetic whatever is the difference. In case it is competitive and they are landing it at their rate and their production cost is low and their transport is low and in India it lands at a lesser rate, there is no issue. But if it is higher and they are landing it at a lesser rate only then dumping comes into play.
Nigel: If we could just take that point forward. The current price of HRC is USD 400 per tonne. That is the cost, insurance and freight (CIF) China, you are saying that the anti-dumping duty is USD 474 per tonne. So, will it be USD 474 minus USD 400?
A: That will be case by case, at that moment of time. That is upper cap to which it can go.
Nigel: And what about the 12.5 percent customs duty? That is calculated on what?
A: That will all be at the cost of landing. Those formulas do not get affected here.
Nigel: There is so much of talk about MIP coming in and we have anti-dumping duty as well which has come in which will protect the industry, but the biggest company, Steel Authority of India Limited (SAIL) has been undercutting prices and that is what has been spoiling prices currently. Is there some kind of measure that we are taking to see that SAIL improves their efficiency, they stop reducing prices. I am also told that there is some retrospective pricing that SAIL is following currently.
A: It is very important. SAIL is also in business, they are not supported by government in any way. So, they will have to take their business decisions which are fair, which are competitive and which are there in the market.
First Published on Aug 5, 2016 08:58 am
