India’s steel majors cut prices between 3-5% on Tuesday in wake of softening global prices which has led to increased imports into the country. The decline was primarily in the flat products segment as the long products are already very competitively priced.
While the Steel Authority of India (SAIL), JSW Steel and Essar Steel have already announced the cuts, Tata Steel is yet to take a call on the issue. The industry is contending that the government was allowing India to be a dump yard for global steel makers by not raising the import duty.
Steel industry in India has remained largely insulated by the sharp downslide witnessed in the world steel market primarily due to the fiscal stimulus launched by the government through cutting the excise duty leading to lower prices and higher demand. This however has resulted in increased price differential between India and international markets allowing greater import of steel.
Government however feels that steel prices have been showing unwarranted upward currents at a time when the government was sacrificing its own revenue in wake of lower excise duty. Clearly, it wants the excise cuts to pass to the consumer and any move to raise the import duty would allow the steel makers to charge higher prices, thus rendering the excise cuts futile.