Any hike in import duty on steel may widen CAD: EEPC India
Kolkata : The Engineering Export Promotion Council (EEPC) of India (EEPC India) on Thursday cautioned that any move to raise import duty on steel or steel products would severely hit India's crucial engineering exports and lead to further expansion of the current account deficit (CAD).
"Steel is the mother of raw materials for a host of sectors, especially the engineering manufacturing. Its domestic prices have sky-rocketed in the past few years, thanks largely to the protection given to the steel makers by a slew of government measures which have proved detrimental to the interest of exports," said EEPC India Chairman Ravi Sehgal.
Engineering exports constitute about one-fourth of the country's total exports basket, said the apex organisation of the engineering exporters.
In a presentation to the Commerce Ministry, opposing the reported move to further raise import duty on steel, the council pointed out how the steel prices have shot up in the past two years.
Illustratively, price of boiler quality steel plates was Rs 39.95 ex stock yard in July 2016. This price went up to Rs 51 ex stock yard in July 2018 with a rise of 21 per cent, having a direct impact on the cost of engineering exports. Besides, the delivery period has increased to 4 to 6 months from just a few weeks earlier, it said.
"By no stretch of imagination, steel can be considered as non-essential or non-necessary imports," the council said.
Sehgal said the country needs to focus on increasing exports for bridging the current account deficit gap, rather than curtailing essential imports like steel.
"All-out efforts must be made in this regard and any more increase in duty on steel imports would lead to a huge weakening of India's export competitiveness," he added.