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Safeguard duty: Govt defers decision

NEW DELHI: Rejecting domestic producers’ claims of injury from imports, an empowered government board on Monday sought further consultations with user industries on the proposed safeguard duty on imports of products like steel, paper and auto parts.

Amidst a conflict of interest between producers and user industries, the Standing Board on Safeguards, headed by Commerce Secretary G. K. Pillai, deferred the decision on the proposal for imposition of 20-25 per cent safeguard duty on imports of these products for two months.

It asked the Directorate General on Safeguards (DGS) to go back to different stakeholders, including the consumer industries, and then revert to the empowered body.

“From evidence, we do not see any threat to the domestic industry,” Mr. Pillai said.

The DGS in the Finance Ministry had recommended imposition of extra duty of 20-25 per cent on imports of these items to protect domestic producer industries from inflows.

“We felt that not enough homework had been done and there is a need to consult both the domestic industry and other interested parties concerned... We have asked the DGS to consult the user industry and come back to the board after 60 days” Mr. Pillai told reporters here.

The safeguard duty is imposed to protect the local industry from surge in imports.

“...there was no urgency to consider the safeguard duty,” Steel Secretary P. K. Rastogi, a member of the board said, adding that the interim proposals of the DGS was found to be “insufficient“.

“This was an interim recommendation (of DGS). ...there should be further examination,” he said.

When asked if there could be an injury to the local industry in view of non-imposition of the safeguard duty, Mr. Pillai said, “From evidence we do not see any threat to the industry.”

Steel producers, led by Essar Steel and Ispat, had approached the Government for immediate imposition of safeguard duty on key steel items. While India has followed WTO-compliant rules for protecting the domestic industry against imports, it has topped the table of those initiating anti-dumping investigations.

Anti-dumping duties vary from country-to-country while the safeguard duties are uniform. Both duties are allowed under the multilateral trade rules after investigations to stand the WTO scrutiny.

With fall in demand in major economies like the U.S. and many European countries, global producers of steel, paper and paper boards are targeting big and growing markets like India. The domestic industries cry foul and seek protection, while users of these products, which are crucial raw material, want imports at reduced prices creating conflict of interests.

Reacting to the government’s move to postpone the decision on the safeguard duty, the domestic steel producers said this would hit them hard as the consignments booked at low prices now would start arriving in the country in a few months.

“The domestic steel industry is in for a severe beating as import orders placed for as low as $400 a tonne will start hitting Indian ports from June onwards, leading to huge stockpiles of inventories for domestic producers,” a senior official of a steel company said.

The user industry, however, welcomed the decision and said it would help give a clear picture to the Government.

“There is no ground for safeguard duty as there has not been any surge in import of hot-rolled coils, as claimed by a couple of steel makers in their petition,” Cold Rolled Steel Manufacturers’ Association Executive Director S. C. Mathur said.

Secondary steel producers like Uttam Galva and Bhushan Steel purchase hot-rolled coils, a key steel item, from domestic producers to process it into cold-rolled products used by auto, consumer durables and white goods sectors. — PTI

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