Trade war: See limited impact on Indian steel, aluminium industry, says Steel Secy

US President has imposed heavy tariffs on imported steel and aluminium igniting fears of global trade war. This decision is expected to affect not only global trade but also India’s export of these goods to America.

Talking about impact of this development on Indian steel manufactured Steel Secretary Aruna Sharma said immediately there is no impact because only 2 percent of the exports go to the US. However, as a principle what is being imposed is not WTO compliant, she said.

The onus lies more on the US to prove that steel going from India is going to have impact on US security measures. Meanwhile, their own 232 is now getting opened up giving exemption to Canada and Mexico and the other countries seeking exemption from US tariff plans Brazil, Japan and South Korea. India is tenth in the line.

India under WTO, has objection to 232 and will work out the details with ministry of commerce because aluminium is also getting affected.

Section 232 of the US law gives the President the ability to issue tariffs based on national security concerns.

Talking about India's anti-dumping she said, it is WTO complaint is very logical and well-argued upon. Any country can question and debt but unilateral tariff measure is not WTO agreed trade measure.

Therefore, it could create trade war but with the kind of windows that are getting opened up, it could emerge to be a much logical way of proceeding into trade tariff. India will definitely question if there is any differential treatment given, she said.

She said approaching WTO would be post discussions with ministry of commerce.

As of now, the ministry is in a wait and watch mode and haven't yet made a representation for an exemption, said Sharma.

Talking about the outlook for the steel sector, she said steel sector has been on a revival mode and the entire policy and approach is that we do not contribute to the excess capacity of the world, but in fact we are increasing consumption in tandem with production.

With focus on infrastructure and being a young developing country, India's consumption has increased steadily, she said, adding that this upward trend will continue in FY19 as well.

A: What you have said before – if you look at it, we are 10th in the series of descending order of the exports that are receding US and ours is only 2 percent of the total exports going to US. So immediately there is definitely no impact but yes, we have an issue of principle.

What is being imposed is not something which is WTO compliant. We will look forward for any measures, which are WTO compliant because that can be argued and discussed. It has been done under 232 – what you were correctly said and under the name of security. So the onus lies more on the US to prove that steel going from India is going to have an impact on their security measures.

The second thing is that their own 232 is now getting more opened up by giving exemption to Canada and Mexico – Canada being the biggest importer – between two of them out of 35, 10 million tonnes are being exported to US. The other countries which are top on the list is Brazil, Japan and South Korea. So in the name of friendly countries, let us see how it emerges then we are 10th in the line.

So we don’t expect any immediate impact but yes, under principle we have an objection to 232 and with Ministry of Commerce, we will be working out the details because aluminium is also getting affected and accordingly proceed ahead.

A: What you say is right. With so many exemptions, the whole clamping itself gets so diluted that I am very sure that it will find its own declining trend. So wait and watch is the best way to proceed ahead with this.

A: If you look at it, our anti-dumping duty is very reasonable, logical and well-argued upon which any country can question and there can be a debate on it and that is an absolutely WTO compliant measure and that has also redressed the crisis, which India was facing against the dumping. So we have found a solution within WTO complaint’s trade measure.

Now, unilateral tariff measures is not which is WTO compliant or WTO agreed trade measures. So definitely there is a question about resorting to unilateral tariff measures and that is where it said that it may trigger the trade wars if you go accordingly.

But with the kind of windows that are going to opened up and the dilution that is happening – we are very sure that it will emerge to be a much logical way of proceeding into the trade tariffs.

A: That with Ministry of Commerce we are working out so it will not be appropriate for me to talk only of steel.

A: Not at all because in case exemptions are given to many countries, we will be pitching hard because you cannot have steel coming from a few countries 25 percent more expensive than steel coming from other countries. There has to be an equity into whatever measures that are being taken. When there is an equity, the steel buyer is going to pay more than 25 percent. The realisation of the exporter is going to remain the same. It is not going to make a difference to the exporters except that the steel being important in the US will be 25 percent more and not only that downstream the cost is going to enhance for the consumer in US. So definitely it is not a straight line kind of an arrangement and India will definitely question in case there is a differential treatment given to India, there is no doubt about it.

A: At this moment, no. as of now, we are discussing, we are watching, how it is proceeding because we don’t expect with so many windows what you correctly talked about Australia when you are having a free trade agreements that Australia may not be a steel contributor but it is definitely the coking coal contributor or raw material contributor to these countries. So it is going to make a difference. Therefore, it is unveiling now. We should not open all our cards just now.

A: Definitely now, SAIL will be on an upward trend. All the adjustments and the facilities are getting ramped up. So that is as far as the PSU is concerned, that includes RINL as well. So let us not forget them. They are also on the upward trend, they have reduced the losses and by March figures, the losses will be reduced even though they don’t have the net profit as we are going ahead.

But as you rightly said, yes, steel sector has been on the reviving mode and our entire policy and approach is that we don’t contribute to the excess capacity of the world. We are enhancing our consumption in parallel to our production. So our consumption is also constantly going up day by day. We had a 5 percent increase and we expect much more with the country’s focus on infrastructure.

Let me tell you very interesting argument that we are a young country. So the young country will require more infrastructure, more housing, more aspirations, more consumption of steel. So with that angle, I see an upward trend. So FY19 will also bring in much more jump. Already we have reached 134 million tonne of capacity. So we expect an addition more in FY19.

A: No, in 232, China is definitely not the target because China exports only one percent of their exports to US. So it is hardly a market. For India also, the major market is Italy, Vietnam is there and US is a low miniscule market so definitely the hit is not here, the hit is going to be measure European Union.

A: Okay, so if you are thinking overall in business, the country’s interest stands first whether it is a small interest or a big interest, the country’s interest always is protected and will be protected.