Last week, the government had extended the minimum import price (MIP) on 19 products for two months, till February 4 to protect domestic steel industry from cheap imports.In conversation with CNBC-TV18, Steel Secretary Aruna Sharma, said the steel industry has seen a positive impact in the last quarter. She said the key focus is on spurring steel demand and the industry growth is unlikely to head into the negative in FY17. Many sectors have been struggling after the roll-out of the demonetisation drive but Sharma believes the cash chaos has not impacted steel production.She believes the domestic steel capacity will go to 150 million tonnes (MT) in couple of years.Below is the verbatim transcript of Aruna Sharma's interview to Sonia Shenoy, Nigel D'Souza & Anuj Singhal on CNBC-TV18. Anuj: How is the Indian industry looking right now? We have had some protectionist measures, minimum import price (MIP) and duty. Have they yielded results and what is the next step?
A: In the last quarter the steel industry has shown positive impact and with this positive impact it has been going up continuously.
To the steel industry we are attempting for a complete holistic approach and in this holistic approach what has been worked at is that we are touching all the points which will give a boost to the Indian steel making whether it is in secondary sector or in the integrated plant. We are trying to handle the problems not just through the antidumping and MIP guidelines but also in the various costing of the inputs which are outside the plant and availability.
The real jump in the coking coal cost did have an adverse impact on the profitability but it's a temporary phase and I am sure the steel industry will get through but what is more challenging and vital today is that we have to have an increase and boost in demand. The consumption in India is very low and that is where the entire efforts of the steel ministry and the steel sector per se, both private and public together is to enhance the steel demand and I am sure that combined with the profitability margins going up in the steel industry, starting from small producer to big producer, I think it's going to make a difference.
Sonia: Can you give us some more details on what exactly the products are, how many products are under minimum import price and the antidumping duty currently and over what time period is this?
A: In antidumping against 173 lines, which we had at the beginning, so minus 19 which we have got in MIP now and 30 the longs which we have removed, rest of them have come in a very WTO compliant regime of antidumping, so we have all of them there. There are 19 which we have got them now is because in colour coating only 2 items had gone into antidumping and the fear was that there should be circumventions as we are going ahead. Therefore, these 19 had to be brought under the MIP.
However, for longs that is thermo mechanical treatment (TMT), rods and everything, there is no evidence that there is any dumping taking place. So I do not think they require antidumping measure at this moment of time. What has already gone in antidumping regime, it is a long-term, it is six months and evidences are there, it will get extended. So there is not much to fear upon it. The whole idea is that in India we do support imports but we do not support the dumping of imports. So the Indian industry has to be competitive both quality wise and cost wise and for that WTO compliant protection measures will always be available to them.
Nigel: You were talking a total of 173 products, just to understand, 19 products are still under MIP, 107 have moved to around antidumping duty. What happens to the remaining?
A: The balance 30, there is absolutely no evidence and separately we are taking up the case for the pipes as well as for extending the range in the stainless steel. These two are under process.
Nigel: You also spoke about spurring steel demand. I am just looking at some numbers - April to October, the total steel demand growth was 3 percent or thereabouts. Now with demonetisation what kind of growth can be looked at realistically for the entire FY17? There are murmurs that maybe we could even have a negative growth. What are your thoughts on that?
A: I do not think it will be a negative growth. It is a temporary phase because it is a way you plan to transact and this will give a big boost to the construction sector. This will give a big boost to the infrastructure development. It is only the way the habit of transaction is going to get metamorphosized and a little impact is there today.
However, in steel sector the majority of the transaction which takes place is through e-mode. It is that smaller sectors or smaller things which was being handled by cash and as a steel industry we have taken up and decided to educate the people on this, ensure that all transactions of the producers are on the e-mode, not only that - the colonies, because the integrated steel plant whether in private or public sector, we do have big colonies, so in those colonies also we are educating people to go for less cash and the villages which we have adopted - that is in the mine areas or in the deep forest areas, there also we are testing with the technology. So I am very sure the steel ministry will have a full range of technology and see that how effectively it is working and I do not think it will have any adverse impact. It's a small transition phase.
Sonia: What is the impact that you have seen on the steel industry so far between November 8th and now because the anecdotal evidence that we are getting is that their production has been hit especially in some parts like south. You are seeing a lot of supply related problems as well. What is your anecdotal evidence suggested?
A: I do not think the production figure has come down anywhere. The production rates are continued to be same. The secondary sector and the distributors yes, there is a slowdown there but it is only that they have got into the way of transaction mode. So they have shifted to cheque payments which is the easier way of doing it instead of cash handling and it is going to create a healthy situation in the marketing of steel because today maybe a lot of cash which was unaccounted or where the service tax and all were not paid. So maybe few producers who are becoming non competitive because of these differential rates, I think it will even out as we are going ahead. It did not have a complete negative impact as far as the productions are concerned but at the distribution network it did have a little setback, but I am sure it's a temporary phase, it will come out.
Nigel: What is the logic of putting an antidumping duty on metallurgical coal (met coke) - that came out of nowhere, USD 25 per tonne, a lot of steel industry is quite upset about this.
A: I agree upon it. This is something the ministry is arguing it out and we will lead to some logical conclusion.
Nigel: By when can we hear some logical conclusion on this?
A: As early as possible but we have to go through the process.
Nigel: Currently our capacity is at 120 million tonne. What is the target? Where are we headed and could there be a rethink on that because profitability is an issue?
A: I think 150 million tonne - we should be reaching in a couple of years and ultimately we have to reach and we cannot be the second largest producer. We have to be a substantial second largest producer and we have to produce value added products which are ready for imports as well. So it is not only the base material in the steel we have to produce. We have to produce a lot of value addition. In India to automobile industry is on a trajectory. More and more automobile manufacturers are coming in the country. All these things will have a very strong bright future, with 2 percent contribution in gross domestic product (GDP) and 7 percent plus growth there is a great potential. There is nothing to moderate the figure.
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