Protection of domestic industry is vital to India’s survival; and this is possible, when strong steps are taken to eliminate avoidable imports from China, in particular

According to the press reports available, the Indian Met Coke Manufacturers Association (IMCOM), the industry is facing a serious threat to its very existence due to the increased and continuing imports of met coke from China.

At present, met coke from China is subject to an import duty of only 2.5%, which is nominal. In the past, suppliers from China had to pay 40% export duty, till December 2012, when it was withdrawn completely, making it attractive for importers to buy from China. Even after paying the 2.5% import duty, imported met coke from China works out to be about $40 (Rs2,400) cheaper than the domestic supply.

The Indian steel industry needs about 35 million tonnes of coke per year, out of which about 20 to 25 million tonnes are met from captive capacities leaving a balance of 10 mt.

The installed capacity of merchant met coke is said to be 10 mtpa but the actual plant utilisation is said to be only 30%-35%, due mostly to cheaper imports from China.

This information was made available, when Gujarat NRE Coke Ltd held a two-day event, called "Global Steel 2014" with the theme "Steeling Recovery". Arun Kumar Jagatramka, Secretary of IMCOM as well as CMD of Gujarat NRE Coke Ltd, while attending the meet, made a pointed reference to the plight and precarious financial implication of the under-utilisation of installed Indian capacity due to this unrestricted imports. He further, pointed out that this is likely to cause tremendous financial strain and is a potential threat to the domestic coke industry, as it has large bank exposure to the tune of over Rs15,000 crore. In fact, he claimed, that many units are in the process of debt restructuring as a result.

Should the government accede to this request, they may also seek IMCOM's assistance that domestic met coke manufacturers should also be persuaded to reduce their margins to be in the market and actively resist the Chinese supplies, provided there are no quality issues.

We may continue to look at the state of affairs of the steel industry, due to this Chinese aggressive selling. In a publicity campaign carried, recently, by the All-India Steel Rerollers Association, they have given detailed methodology used by the Chinese manufacturers in "wrongly classifying the imported reinforcement bars in the Alloy Steel Category to gain benefit of the subsidy and thereby marketing at a discounted price in India". It may be noted that Government of China offers a 13% subsidy on export of Alloy Steel Bars and levies an export tax of 15% on reinforcement bars exported by Chinese manufacturers. This collusion of efforts by vested interest parties is detrimental to steel manufacturing industry in India.

This has been done by circumventing the standards and current imports do not conform to Bureau of Indian Standards (BIS) thereby having an adverse impact on the Indian industry. It is not, therefore, in our interest to continue the import of reinforcement bars from China.

In the case of power equipment, for instance, the Heavy Industry Ministry has taken up the issue with the Finance Ministry and are mostly likely to raise the subject again in the Inter-ministerial meeting on the Budget and request that import duty on power generation equipment should be raised to 10% from current 5% and that the countervailing duty be brought to nil. Such a move, if approved by the government, would directly benefit domestic manufacturers like BHEL, Larsen & Toubro and Bharat Forge. They may go even one step further that those who wish to import power generating equipment need to obtain a "no objection" certificate from domestic manufacturers.

The only good news, at the moment, comes from NMDC, a state owned successfully operating mining enterprise, that it is planning to open new iron ore mines both in Chhattisgarh and Karnataka, next year, and these will enable it to increase the production to 50 million tonnes, from the current level of 30 mt, in the next 5 years.

The other development concerns the acquiring of coking coal assets in Mozambique, according to Narendra Kothari, CMD of NMDC.

Protection of domestic industry is vital to our survival; and this is possible, when strong steps are taken to eliminate avoidable imports from anywhere, particularly from China, where our balance of trade is against us in billions of dollars!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)