Continuation of MIP on Steel- Government appears to be on cross-road

New Delhi, Apr 27 (KNN) The minimum import price (MIP) imposed by the Government  in February, 2016 on 173 steel items is becoming a matter of debate within the Government itself.

MIP ranging from $341 to $752 per tonne was imposed on 173 steel products to provide relief to local steel makers hurt by an increase in cheap imports of these items.

However, the user industry strongly objected to this decision. Engineering goods exporters’ body EEPC India said the MIP will lead to further drop  in engineering exports. It has asked for a compensatory mechanism to make up for the increased raw material price which the distressed exporters, mostly in the SME segments, will be made to bear following the protection given to the large steel manufacturers.

As per the Government notification the MIP conditions are valid for six months from the date of the notification (February five) or until further orders, whichever is earlier.

As the expected date of  review of the MIP  in June is coming nearer, turf war among the stake holding Ministries  is warming  up .

According to sources, the Steel Ministry thinks that though the  as the prices are better now, the steel industry is far from its desired financial position. Imports also remained unabated and  there is no question of withdrawing MIP at the moment,”

However, according to sources in Commerce Ministry, the MIP regime need to be reconsidered. With imports showing no signs of decline, the very effectiveness of the MIP regime,  is under question, says the source.

Also, the imposition of MIP can be challenged at the WTO as a trade-distorting measure and will need the Government to compile voluminous data to show unfair pricing by the major exporting states like China and also competitiveness of Indian Industry.

In the meantime the engineering export Industry, prevalently in the MSME sector is reaching every Government forum for withdrawal of the MIP.

FISME  the leading federation of Indian MSMEs  made a strong case against the MIP before a parliamentary Committee and mentioned that the cost of production of some Indian steel manufacturers are four times of the global benchmarks, which only shows their utter inefficiency.

At the recently held meeting of the Board of Trade, the highest Industry consultation body of the Ministry of Commerce, Mr. T. S. Bhasin, Chairman of EEPC India  mentioned  about the serious crisis the MSME engineering goods exporters are facing  due to the high steel price.

In the meantime imports remain unabated. According to the Joint Plant Committee (JPC), imports stood at 0.997 million tonne (MT) in March this year compared with 0.84 MT in the same month last year, recording a 18.2% rise. In February this year, India had imported 0.912 MT steel.

It appears that Government has to bite the bullet during the review of MIP in June. Its continuation will bring succour to the Indian steel manufacturers which include the top NPA assets of Banks.

However, it will also create serious challenges to the engineering exporters  to remain competitive in the global market and jeopardise job of lakh of workers  all over India engaged in the sector. (KNN/DB)