The government has imposed safeguard duty at a rate of 20% on imports of a certain variety of stainless steel from China to protect domestic players.
The duty has been imposed on hot rolled flat products of stainless steel-304 grade (up to a maximum width of 1605 mm), the finance ministry said in a notification.
"... the central government after considering the said findings of Director General (Safeguards), hereby, imposes on hot rolled flat products of stainless steel-304 grade (Upton a maximum width of 1605 mm) and encompassing all austenitic grades ... when imported into India from China, a provisional guard duty at the rate of 20 per cent ad valorem," it added. It further said that the safeguard duty will be effective for a period of 200 days from the date of the notification, unless revoked, superseded or amended earlier.
Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain time-frame to avert any damage to domestic industry from cheap imports.
The government currently levies 5% import duty on imports of stainless steel.
"It is a positive move and sentiments will definitely become better as it will discourage cheaper imports from China," Jindal Stainless president and executive director Ramesh Nair said.
India has a surplus stainless steel production capacity at about 3.5 million tonnes per annum (MTPA). Of this, about 0.8 MTPA gets exported.
Despite this, the industry estimates that imports from China, amounting to about 2.5-3 lakh tonnes in a year, are taking place largely due to cheaper rates offered by the Chinese manufacturers.
As per the industry estimates, China currently produces about 12-13 MTPA, which is much more than their consumption at about 9 MTPA. The Chinese production is expected to rise to 20-25 MTPA in two-three years.
Among the domestic producers, Jindal Stainless, with a capacity of 1.8 MTPA, accounts for about 50 per cent of total domestic production. Other major players include Salem Plant of SAIL, Viraj Steel and Mukand. In November 2011, government had imposed anti-dumping duty on certain categories of flat stainless steel from European Union, South Africa, the US and Taiwan to protect the domestic industry from cheap imports from abroad. The level of duty on the product varied from country-to-country.