NEW DELHI: With speculation doing the rounds that import curbs may be placed on the steel sector in the form of increased tariffs, the Engineering Export Promotion Council (EEPC) on Thursday warned that doing so would affect engineering exports and might even widen the current account deficit.
The government had, during a review meeting on the economy held last weekend, decided to impose a series of measures of which raising import tariffs on non-essential commodities was one. While it is still unclear which products will attract higher imports, sources say they may include goods like luxury vehicles, steel, aluminium etc.
The EEPC has reacted to the reports by stating that to increase import duties on steel would be counterproductive.
“Steel is a mother of the raw materials for a host of sectors, especially the engineering manufacturing. Its domestic prices have sky-rocketed in the past few years, thanks largely to the protection given to the steel makers by a slew of government measures which have proved detrimental to the interest of exports,” EEPC chairman Ravi Sehgal stated.
In a presentation to the commerce ministry, the EEPC has submitted examples like the cost of boiler quality steel plates. While the rate was Rs 39.95 ex-stockyard in July 2016, this has gone up to Rs 51 in July 2018.
The EEPC has also contested any definition of steel as a ‘non-essential’ commodity.
“By no stretch of imagination can steel be considered as non-essential or non-necessary imports. The entire focus on the Make in India programme is to scale up value addition in manufacturing within the country — by enabling low-cost raw material, so that more and more value-added products can be made for exports and for domestic consumption,” it said.
Sehgal has also pointed out that making steel imports costlier could be counter-productive in limiting a widening current account deficit. Costly steel would increase production costs for engineering exporters, thereby reducing their competitiveness in the global market.