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US tariffs unlikely to hit Indian steel

BS Bureau

US President George W Bush has slapped tariffs of 8 per cent to 30 per cent on several variants of imported steel in an effort to aid the ailing US steel industry. The penalty exempts certain US trading partners such as Canada and Mexico as well as a handful of impoverished nations.

The hardest-hit nations include China, Japan, South Korea, Ukraine and Russia. On steel slabs, there will be no tariffs on the first 5.4 million tonne imported for three years. However, a 30 per cent tariff on additional tonnage will be imposed.

With the prevailing anti-dumping duty, which has already hit Indian exports, the tariffs imply a virtual closure of the US market for hot-rolled products. However, it is still not clear as to how the tariffs will affect India.

Indian steel makers seem to have taken the US announcement in their stride. B Muthuraman, managing director of Tata Steel, said: "Our exports to the US this year stand at zero. Last year, too, they were negligible. We are developing alternative markets like China, West Asia and Southeast Asia."

Muthuraman pointed out the decision to adopt a safeguard duty would undermine free trade. "It may help the US steel industry in the short run but the US consumer industry will suffer," he warned.

On the impact on Indian steel, he said: "We are far more competitive than the US steel industry. Ours is a growing market, unlike the European Union and Japan, so the tariffs will not make much of a difference."

Growing exports from India confirm the view of Muthuraman. Exports of finished steel and semis during the period April 2001 to January 2002 have been estimated at 2.525 million tonne, an increase of 4.85 per cent compared to the corresponding period last year.

Raman Madhok, deputy managing director of Jindal Iron and Steel Company, one of the major exporters of galvanised steel, agreed the impact on India would be minimal.

"Even in this month, we have exported 10,000 tonne of galvanised products and buyers have factored in a tariff of 20-25 per cent. What remains to be seen is what they do with the balance 10 per cent. But, we are hopeful that it will not have much of an impact," he commented.

However, Steel Authority of India Ltd chairman, Arvind Pande, said: "Exports of steel from India will no doubt suffer. More importantly, we will have to take suitable action to prevent surplus steel floating in the world from reaching our own shores. In terms of WTO provisions, India was looking for an exclusion from this action taken by the US, on the ground of developing-nation status. This has not taken place despite bringing it to their notice."

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