Disapproving the demand for removal of steel from free trade pacts with Japan and South Korea, Steel Minister Beni Prasad Verma today advised the industry to become more competitive by reducing cost of production.
"I don't know what the industry is clamouring for. They have to understand that when import duty would be near zero by 2025, they have to compete. You have to lower operation cost, raise competency level and deploy latest technology. Only then, your cost of production will come down," Verma told PTI.
In view of growing imports of steel from Japan and Korea, leading private sector producers JSW Steel and Essar Steel had earlier this month demanded taking steel out of the purview of free trade pact with the two Asian economic superpowers.
India had signed FTA with South Korea in January 2010 and with Japan in August last year.
Under FTA, duties on most of the products, traded between the countries, are either eliminated or reduced sharply.
Verma said since India is a signatory to the WTO, it has to reduce import duty to near zero by 2025. It would be better if the domestic industry gears up from now on to achieve the competitiveness.
"There is still a 3.5 per cent duty on steel imports. So, the industries in India must gear up to competition because, today or tomorrow you will enter into that near zero phase," he said.
Moreover, India has an adverse balance of trade between with both Japan and Korea leaving it with less bargaining power to lobby for a product removal from the FTA purview.
"When you are contributing less (to a bi-lateral trade), your negotiating power is also less. When you are in surplus, you can say we want to put iron, steel and others out of the purview," he said.
JSW Steel's Chairman and Managing Director Sajjan Jindal had alleged that since economies of Japan and South Korea are not doing well, they are dumping lots of steel into India at a very low price, taking advantages of these FTAs.
Essar Steel Executive Director (strategy and business development) Vikram Amin said, "There is a definite case to exclude steel products from the ambit of the FTA with Korea and Japan."
India's steel imports stood at 6.83 million tonne (MT) in 2011-12.
According to Joint Plant Committee of the Steel Ministry, imports went up to 2.88 MT during April-July period of the current fiscal over 1.88 MT in the same period of last year, notching a growth of over 53%.