MSMEs utilizing only 50% capacity; subsidized imports will turn manufacturers into traders
February, 2021, New Delhi: Indian Stainless Steel Development Association (ISSDA), India’s apex stainless steel body, has voiced concerns aboutthe impending adverse impact on domestic industry due to the temporary revocation of trade remedial duties on importing stainless steel, as announced in this year’s Union Budget. ISSDA, along with four major associations representing MSME stainless steel producers, namely The Wazirpur Industrial Estate Welfare Society, Delhi; Rajasthan Stainless Steel Re-rollers Association, Jodhpur, Rajasthan; Jagadhri Stainless Steel Re-roller Association, Haryana; and Stainless Steel Re-rollers Association, Ahmedabad, Gujarathas urged the government to reconsider this step as it will distort the domestic market by flooding it with subsidized stainless steel from China and Indonesia, and will lead several MSME players to the verge of bankruptcy.
Mr K KPahuja,President, ISSDA said, “The government reversed six trade remedies out of which three relate to stainless steel, which is just 3% of overall steel industry in India. Therefore,it has disproportionately impacted stainless steel, including its MSME sector, and considerably dipped the market sentiment.It is noteworthy that MSME sector constitutes about 35% of the domestic stainless steel industry, spread across the country, and is a major supplier for utensils and household segments. However, the installed capacity for manufacturing stainless steel in the MSME sector is ~15 lakh tonnes, with less than 50% being utilized. Keeping this in mind, a potential market brimming with unregulated and cheap imports of Chinese stainless-steel goods is expected to make MSME players go bankrupt orturn them into traders. The demand generated by a growth-oriented budget may be captured by cheap dumped importsby Chinese companies, in and out of China. This will further have an adverse impact on prospective investment in the domestic industry, which has been in financial stress for more than a decade and will lead to loss of employment. This move is poised to drift away from Make in Indiastance of the government, while leaving the domestic industry at the mercy of foreign players instead of being Atmanirbhar.”
While China has over 30% surplus capacity for stainless steel production, huge capacity additions backed by Chinese investments have brought the installed production capacity of Indonesia to 30 lakh tonnes in the last 2-3 years, along with an additional 25 lakh tonne capacity in the pipeline. Interestingly, Indonesia’s domestic consumption is a mere 2 lakh tonne. Consequentially, the two nations have been dumping subsidized and substandard stainless steel products in India and other global economies in heavy volumes and unregulated manner in the past several years. China and Indonesia are also known to provide non-WTO compliant subsidiesto the tune of 20-30% to their domestic manufacturers, rendering the global stainless steel market significantly destabilized. Consequentially, all economies have countered this irrational dumping by enforcing additional trade remedial duties.
