Steel Industry to Supply MSMEs at Export Prices

New Delhi, Apr 22 (PTI) The steel industry has agreed to supply the metal to micro, small and medium enterprises (MSMEs) at rates on par with export prices, a top government official said on Tuesday, allaying concerns that a safeguard duty imposed on certain import products will have adverse impact on small enterprises.

The government on Monday imposed a 12 per cent provisional safeguard duty for 200 days on five steel product categories, including hot rolled coils, sheets and plates, to protect domestic players from surge in imports. The decision came following a recommendation from the commerce ministry's investigation arm DGTR.

For each product, a threshold import value has been notified. If imports arrive at a value lower than the threshold, the duty becomes applicable.

These steel products are used as inputs by domestic manufacturers of various sectors, especially those engaged in manufacturing of engineering goods.

Talking to reporters here on Tuesday, Steel secretary Sandeep Poundrik said, "As far as your question about MSMEs is concerned the steel industry has already agreed that they will supply to MSMEs at export parity prices...

"The steel industry is talking with EEPC (engineering export promotion body) for export MSMEs. They are in talks. They have already put that system in place so that the MSMEs are not impacted by the high steel price."

Export parity pricing refers to the adjusted international market price at which domestic producers sell steel abroad, after accounting for freight and export-related costs.

By offering MSMEs the commodity at internationally competitive rates, the government ensures that smaller manufacturers do not bear the brunt of price surges caused by policy interventions.


The secretary also said that the government needs to ensure reasonable price realisation for all industries and added that it is very normal for some industries to criticise the Centre's decision as steel isn't an end product and any consumer industry may not like it.

The secretary further said that two anti-dumping probes were underway against China and Vietnam, hearings are over and recommendations are expected soon.

According to think tank GTRI (Global Trade Research Initiative), imposition of a 12 per cent safeguard duty on five steel product categories may halt their imports and force importers to buy these goods from domestic players, who are likely to raise prices following the levy.

It said since Indian producers cannot meet demand for specialised steels like abrasion-resistant plates, imports are essential but the new safeguard duty could raise input costs by 8-10 per cent, just like the recent hikes by local steel mills.

The GTRI raised concerns that the DGTR (Directorate General of Trade Remedies) recommended these duties without verifying claims of industry injury, even though domestic steel production has grown by 19 per cent and capacity utilisation is high (83.90 per cent).

The safeguard duty, along with arbitrary Quality Control Orders (QCOs), could severely harm India's MSME-driven downstream industries, it said.

Meanwhile, big players benefit from special exemptions such as met coke import quotas and this unfair system weakens MSME competitiveness and risks shutting down many firms, it added.

"MSMEs already struggle with monopolistic practices, high minimum order quantities, and long delays in getting supplier approvals, making them rely heavily on expensive domestic steel," it said.