Capital goods manufacturers write FM Arun Jaitley requesting further not increase import duty on Stainless steel

Process Plant Machinery Manufacturing & Exporting companies in the country have written to Union Finance Minister Arun Jaitley to stall any move by his ministry to increase import duty on stainless steel from recently hiked present 7.5 % to 15 % in near future.

The Union Finance Ministry had increased import duty on flat rolled stainless steel products from 5 per cent to 7.5 per cent in the Union Budget 2014-15.

"We are alarmed to observe that the steel ministry has initiated a proposal to increase the import duty on stainless steel products from recently enhanced duty of 7.5% to 15% with tremendous haste for stainless steel coils and sheets used by hundreds of SMEs. Such an action to increase the import duty from recently increased level of 7.5% to 15% on imports of stainless steel coils and sheets will lead to anamolous inverted import duty structure given the fact that stainless steel end using products especially in chapter 73 attract import duty of 10% only." Said agitated Mr V.P.Ramachandran, secretary, Process Plant and Machinery Association of India (PPMAI).

"This action will make domestically produced end products far less competitive vis-à-vis imports of finished end use products . These imports will replace the demand for domestically produced finished end use products and will kill the domestic end using industry and RESULTANTLY the domestic stainless steel industry. For example , the utensil industry will be immediately hurt. Therefore the move to increase the import duty to 15% will be counterproductive." Mr Ramachandran said.

"Indian stainless steel industry has a poor range of products with near monopoly of one producer in private sector. Salem Steel Plant has limited range of products. The domestic industry has enjoyed automatic protection due to the impact of depreciation of the rupee from Rs.40 a dollar to Rs.60 in past two years. There are anti dumping duties applicable on a host of stainless steel imports from practically all countries on the behest of local single private sector producer." Mr Ramachandran added.

"The proposal to increase rate of duty to 15% exceeds the peak rate of duty 10%. Such a proposal will mean higher duty for raw material imports than the finished goods and capital goods which will hurt the capital good industry apart from consumer goods industry.A host of the imports in stainless steel flat products by the end users do not offer competition to the domestic production sources because the domestic industry does not manufacture these grades and sizes" he said.

"PPMAI membership comprises of mostly SMEs including Consulting Engineers & Engineering, Procurement & Construction Management Companies , Engineering Procurement & Construction Contractors, Equipment Manufacturers & Fabrication Companies, Project Construction Contracting Companies, Inspection and Quality Assurance Companies , who will see their operating margins fall sharply if you go ahead with this move. The domestic producers are catering to low end needs whereas our members cater to high end products in domestic and export markets for which imports are essential." He said.

The proposal to raise import duty on imports of all including high end stainless steel products will help create monopoly for the domestic producer and will deprive our members from gaining competitive edge in global markets.

We do have confidence in the new government that it will take care of all end user industries including SMEs and not support any action which leads to creating monopoly to suit one business house.

Source : Equity Bulls

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