New steel import norms to dent capacity utilisation: Experts

MUMBAI: The recent government notification to ease steel import norms will not only increase inward shipment of the metal, but also add to woes of domestic firms battling demand slowdown, industry experts said today.

The industry called for an urgent review of the decision, saying the quality of domestic steel is of global standards.

"The government's latest move will further increase import of steel, resulting in idling of local production capacity, further adding to the woes of ballooning current account deficit," JSW Steel Deputy Managing Director and Group Chief Financial Officer Seshagiri Rao told PTI in an email.

"The long-term implication is dangerous, as the domestic industry is facing demand slowdown and domestic surplus will further go up," he added.

In its August 7 order, the government had exempted steel and steel products imported for mega industrial projects with investment over Rs 1,000 crore from the quality control regulation known as the 'Steel and steel products (quality control) second order of 2012'.

The government's move has caused consternation within domestic steel companies about import of a lot of inferior quality steel products into the country.

"The main worry is that apart from plates, a lot of plain-vanilla low-grade structural steel like rebars and TMT bars will also get into the country. It will strike at the very heart of our steel industry where currently a lot of idle capacity exists. The industry needs a curb on imports to stop dumping," Rao added.

Essar Steel India Chief Commercial Officer H Shivramkrishnan said, "The steel industry is already hit from all sides, including high input cost, cheap FTA imports, proposed reduction in export duty on iron ore and the weakening domestic demand.

"The new rule has the potential to jeopardise the domestic steel industry due to threat of cheap imports from countries like Ukraine and China and would add to the woes of the already struggling industry besides adding to the high CAD".

He also termed the government move as surprising and retrograde.