If government is going to protect steel producers, needs to protect 8 lakh MSMEs too: EEPC Chairman

4/12/2024 - Updated 1:34:11 pm

Courtesy: The Indian Express

EEPC Chairman Pankaj Chadha said while the balance sheets of large steel manufacturers remain robust, those of around 8 lakh MSMEs are in a precarious state.

Any duty hike on steel imports to protect steel manufacturers will have a detrimental impact on small industries that are already grappling with numerous challenges, Pankaj Chadha, Chairman of the Engineering Export Promotion Council (EEPC) of India, said on Wednesday. This follows reports that the Ministry of Steel has proposed a 25 per cent increase in duty to shield domestic manufacturers from steel being dumped into India by China, as well as a surge in imports from several countries with which India has a free-trade agreement (FTA). “MSMEs are not being invited to the ongoing consultations to address trade-related issues faced by the steel industry. Discussions about a duty hike will hurt the downstream industry. Our perspective is straightforward: if protection is being provided for steel producers, there must also be protection for MSMEs. You cannot have a situation where producers are safeguarded while the 8 lakh MSMEs are left without support,” Chadha said. He added that while the balance sheets of large steel manufacturers remain robust, those of around 8 lakh MSMEs are in a precarious state. Within EEPC, 50 per cent of export value is contributed by MSME members, and 60 per cent of its members are MSMEs. “How will MSMEs compete with international players? The steel sector should be addressed, but not at the expense of other sectors. For instance, Japanese steel shipments are currently stuck at ports due to delays in issuing no-objection certificates (NOCs). These

products are unavailable in India, and shipments have been stalled for the last three months,” Chadha said. Meanwhile, a report by the Global Trade Research Initiative (GTRI) stated that India’s steel imports are “neither excessive nor unwarranted.” According to the report, half of these imports consist of critical raw materials for domestic production, while 40 per cent are specialised items that India does not produce in sufficient quantities. “Despite this, restrictive import policies continue to stifle the industry. The Steel Ministry's inefficient processes not only burden businesses but also risk exemplifying the challenges of India’s business environment. Immediate, high-level intervention is essential to streamline procedures and support the growth of the steel sector,” the GTRI report said. Ajay Srivastava, a former trade officer and head of GTRI, argued that India’s large steel producers, despite claiming hardship from imports, have prospered due to protective policies. He said that domestic stainless steel prices are 25–30 per cent higher than comparable imported steel for certain thicknesses, even after accounting for duties. “By monopolising raw materials and prioritising supply to their own downstream ventures, these large firms have forced many small businesses to close. This monopolistic behaviour warrants investigation by the Competition Commission of India (CCI), especially given the record profits reported by major players in recent years,” Srivastava said.