E-Paper
Govt to keep steel out of free-trade pacts
With the Reserve Bank of India (RBI) warning that the Indian banks’ proportion of non-performing assets (NPAs) might reach double digits, the government is planning to keep steel out of the ambit of the foreign trade agreements it inks in the future.
With the Reserve Bank of India (RBI) warning that the Indian banks’ proportion of non-performing assets (NPAs) might reach double digits, the government is planning to keep steel out of the ambit of the foreign trade agreements it inks in the future.
It would also review the existing foreign trade agreements to see if steel could be excluded from them. This will then curb cheap imports of steel, thereby protecting the interests of domestic producers. Steel companies account for a large proportion of gross NPAs, currently at 7.7%.
Due to cheap imports from Japan and Korea, the Indian steel producers are operating at below capacity.
“The Indian industry has not been able to benefit from the FTAs inked in the past. So we are reviewing old and new agreements. No decision has been taken yet,” commerce minister Nirmala Sitharaman told HT.
India has implemented these agreements with several countries, including Asean, Japan, Korea and Singapore. It is also negotiating similar pacts with the European Union, Australia, New Zealand and Canada among others.
Repayment from steel companies has been a cause for concern. While the sluggish economy impacted demand, the country’s steel sector was further hit by increased imports.
However, the worst may be over with imports declining in the last few months after the government imposed anti-dumping duty, safeguard duty on imported steel products. The government also announced minimum import price.
The Indian steel producers also witnessed prices rebounding with a pick-up in demand. However, the steel consuming sectors such as construction and automobiles gave a mixed reaction to the move.
“It will make a difference to the auto sector if an inverted duty structure is created by keeping raw materials in the negative list which means higher duty. And if duty on components and vehicles is reduced by putting them in a positive list then the auto industry would be worried. However, if the auto industry is also kept in the negative list , then the auto industry has no reason to seek raw materials in the positive list of FTAs,” said Vishnu Mathur, director general, SIAM.
On the other hand, Santhosh Kumar, CEO – Operations & International Director, JLL India, says, “The consumption of steel in India is increasing significantly and the Indian construction industry is one of the major steel consumers.”
