The Indian steel industry can make major inroads globally in the medium term as China – the world’s biggest steel producer – is unlikely to remain the preferred supplier for many countries in the post-Covid global trade order, a top Indian steel sector official said.
Dr. Bhaskar Chatterjee, Secretary General & Executive Head of the Indian Steel Association (ISA), told indoasiancommodities.com in an interview that Indian steelmakers had a golden opportunity to strengthen their global positioning as more countries would tend to reduce their import dependence on China.
“Countries especially in South-East Asia have been bullied by China in the past and they have started showing their resentment. China has built a gigantic steel manufacturing scale which is primarily export-oriented, but it may boomerang on it due to recent developments,” he said.
India, the second-biggest steel producer in the world, could become a preferred supplier for some countries due to growing anti-Chinese sentiments at this stage, he added.
Despite pipping Japan to the third spot last year, India is still small when compared to China that produces 50 percent of global steel.
Of the nearly 1,869 million tonnes (MT) of global crude steel production in 2019, China contributed a staggering 996 MT while India produced 111 MT. The significant difference in scale testifies the theory that Chinese production is meant more for supply to other countries.
“Our steel exports currently are just 7 percent of our total output. If we can just double it up to 14-15 percent in a medium term scenario, it will consolidate our global positioning as the large-scale supplier of steel products in the coming years,” Dr Chatterjee said, adding that the drive would need support from the government to urgently fix the high duty structure for steel products.
Local taxes makes Indian steel expensive
He said India could be extremely price competitive producer, but high electricity rates and a green tax etc added to the final costs.
“We have been asking the government to look into this critical issue as we have the opportunity to further consolidate our position in the global market,” Dr Chatterjee pointed out.
ISA recently has also strongly taken up the issue of imposition of a Border Adjustment Tax (BAT) on steel imports with the Ministry of Steel.
“The steel products coming to India from countries like China, Iran, Japan, South Korea, etc. are not subjected to high duty structure post-production in those countries as is the case with us. If something like BAT is imposed on imported steel, it will create that much-needed level playing field,” Dr Chatterjee emphasized.
Despite being second-largest producer in the world, the country is facing a deficit situation in steel trading. The total worth of steel products imports in the country had stood at Rs 44,500 crore as against exports of Rs 36,500 crore last year.