India’s steel sector grew at around 6.8% in the April-June 2018-19 quarter, while the growth of crude steel production was around 3.5%. Imports, including those of semi-finished goods, have fallen by 13%, and finished goods by around 9%, y-o-y. Exports have declined by 27%. Steel prices have remained under pressure globally on the back of increased production in China and the fear of a global slowdown following the trade war, which has resulted in lower consumption.
Within the country, the overall economic slowdown and lack of liquidity has impacted the demand for steel from the construction sector, consumer durables and automotive industries, etc. resulting in a steep fall in product prices. The fear of dumping has also led to lowering of steel prices. Due to weak demand, steel prices have declined nearly 20% in the first three months of the current financial year.
The steel sector seeks the imposition of the following measures to revive its growth momentum.
Short-term Measures
1. Extend quality control orders on more steel products and introduce an effective monitoring mechanism to ensure standards.
2. Increase value-addition norms in policy for preference to domestically-manufactured iron and steel products for Government procurement.
3. Make trade actions more effective by removing the lesser duty rule (LDR) and imposing fixed
duty in place of the reference price mechanism.
4. Trade actions such as anti-dumping, countervailing duty and safeguards should be
fast-tracked to arrest unfair exports being dumped into India.
5. Raw Material Security
6. Liquidity
Medium-term Measures
7. Steel Demand
Increase metal intensity in key sectors
Incentivize auto companies for localization of key components, and for procuring domestic steel.
