The Telegraph
Since 1st March, 1999
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Battle royal over imported steel quality

New Delhi, Nov. 7: Battle lines have been drawn over the steel ministry’s decision to withdraw a government notification which had made it mandatory for imported steel to be of BIS standards.

Most big steelmakers like SAIL, Tata Steel, Essar Steel, and the Jindals are unhappy with the withdrawal as they feel it could lead to cheap imported defective steel flooding the market. They are working for its replacement with an alternate measure at the earliest.

They would like to see a fresh notification issued quickly which spells out the definition of defectives and sub-standard steel on the lines of the European Union, so as to halt any attempt by Central Asian producers to dump products here.

The withdrawn notification — known as public notice 44 issued by the Directorate General of Foreign Trade — had been issued just last year to stop defective and sub-standard steel being dumped here at cheap prices.

Its withdrawal is being seen by the big players as a move that will see defective steel coming into the country disguised as normal slabs or bars at low duty rates. Defective steel attracts higher duty rates than normal steel all over the world.

“Some kind of checks are necessary, otherwise we will see defectives being dumped here spelling trouble all around,” said a SAIL director, who did not wish to be named.

Such defective steel is normally used by re-rollers, most of whom are based in northern India. In fact the decision to withdraw this notification was taken by the steel ministry after a meeting at Ludhiana organised by the then steel secretary V. K. Duggal with the Steel Consumers Council.

Duggal has since had to leave the ministry in an unceremonious manner. Small re-rollers, however, say that the notification had resulted in great difficulties for them as they had to get BIS certification for their steel imports and this caused an “unnecessary transaction cost”.

They also argue that with domestic prices at an all time high, they need more room to import cheaper steel. In fact even the steel ministry had accepted their logic at the meeting held at Ludhiana that it will “go a long way in stabilising prices.”

The year has proved to be one of the most volatile years for steel prices with domestic and global steel prices moving between a band of $200-$300 per tonne of finished steel.

“Many small players import defectives to make their steel rods and bars, this tells on the final product and the price it commands in the market,” said Pradeep Aggarwal, managing director of Kamadhenu Ispat, a re-roller producing construction steel bars and rods from prime steel.

“The Tatas, SAIL and we source prime steel and it tells on the price we command in the construction market. Those who source defectives command a lower price,” Aggarwal said, adding that this was the USP that had helped him build up his sales to 150 lakh tonnes a year.

Ministry officials are tightlipped on the issue, especially as Duggal is believed to have earned the Prime Minister’s wrath for having tried to lower import duties in a bid to stabilise the steel market prices.

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