India under global pressure to let steel minimum import price lapse next month

NEW DELHI, JULY 18: Pressure is building on India at the World Trade Organisation (WTO) not to extend the minimum import price (MIP) on steel beyond the first week of August when it is slated to lapse.

In a recent meeting of the goods council at the WTO, nine members, which include the US, the EU, Japan, Australia, South Korea, Canada, China, New Zealand and Chinese Taipei, asked India to justify its continued restrictions on imported steel, an official from the WTO told BusinessLine.

New Delhi was also asked to remove the port restrictions on import of apples.

“We realise that continuing with the MIP for long is not a viable option and could go against WTO rules if seen as a permanent duty. Imposition of anti-dumping duties is a better option, but the process takes time. The government is weighing the situation,” a Commerce Ministry official said.

Last February, India had imposed an MIP, ranging from $341 a tonne to $752 a tonne, on 173 categories of steel products to provide relief to domestic producers against cheap imports. It topped it up with safeguard duties (penal duties to stop steep increase in imports) on hot-rolled flat steel the following month.

New Delhi’s stance

If New Delhi continues with the MIP for a longer time, it could be dragged to a dispute at the WTO by any of the complaining members. But, India’s representative at the WTO maintained that the country had not flouted rules. “India said the MIPs were temporary and a response to a surge in steel exports by some major steel producers that have adopted predatory pricing practices. The safeguard on imported hot-rolled flat steel products was adopted in conformity with WTO requirements,” the WTO official said.

The steel industry worldwide is suffering due to low global prices and countries are taking various protectionist measures to support their local industry. Despite the imposition of MIP, India’s steel imports increased 20.2 per cent to 11.21 million tonnes.

New Zealand and China pointed out at the meeting that the continued closure of certain ports such as Tuticorin and Visakhapatnam to imported apples was a barrier affecting free trade. India said that the ports that have been recently opened, including Chennai, Kolkata and Kochi, had adequate food safety and quarantine facilities in place to ensure smooth inflow of apple consignments. No assurances were, however, given on the status of Tuticorin and Visakhapatnam ports.

Apples from Washington, New Zealand and Australia pose strict competition to apples grown locally as India has committed to the WTO that it will not raise import duties on the fruit beyond 50 per cent.