A government source said that despite a proposal from trade officials and pressure from local steel makers, India will not apply countervailing tax (CVD) on some steel products imported from China.
The ministry is rejecting the Directorate General of Trade Remedies (DGTR) suggestion to apply 18.95% CVD on specific flat-rolled steel goods imported from China for five years, according to a finance ministry official directly involved in the subject.
According to the source, the finance ministry’s action attempts to protect steel-consuming enterprises from increasing pricing, despite the fact that it may harm domestic steel manufacturers.
“Imposing CVD protects manufacturers, but users end up paying a higher cost”, said the official, who declined to be identified because the final decision has not been made public.
“So you have to strike a balance between the interests of users and manufacturers”, the official added.
CVDs are additional taxes levied on imported goods or items that are subsidized in their native nation, thereby harming industries in the country that imports them.
According to World Trade Organisation rules, a member country may levy an anti-subsidy duty if a product is subsidized by the government of a trade partner.
According to the DGTR report, CVD on such Chinese imports was abolished by India in February last year, and over 170 Indian steel businesses, including Jindal Stainless Ltd and Steel Authority of India, have endorsed a petition to re-impose CVD for another five years.
The DGTR, India’s trade ministry’s investigative arm that looks into unfair trade practices, recommended CVD on select stainless steel flat items in April.
Despite steel purchases from China reaching a six-year high in April-May, with imports increasing 62%, the finance ministry rejected the request.
According to the source, applying CVD would have harmed small and medium-sized businesses while benefiting a few giant conglomerates at a time when India’s economic recovery was swift but unequal.
The decision will aid Chinese shipments even more at a time when Asia’s largest country is on track to export the most steel this year since 2016, thanks to a weaker yuan and competitive prices, despite poor domestic demand.
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