Govt. initiates talks on imposing CVD on stainless steel

PMO discusses potential countervailing duty (CVD) on stainless steel, aiming to curb cheap imports from China and support small and medium producers in India. 

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The Prime Minister’s Office (PMO) has started discussions on the imposition of countervailing duty (CVD) on stainless steel. It has raised hopes within the industry as such an action would curb cheap imports from China and support small and medium producers in India, two people familiar with the development said, as reported by Mint.

PMO intervened after the finance ministry rejected the duty to counter foreign subsidies to producers, despite support from steel and commerce ministries.

The PMO is worried about how lower imports will affect domestic producers. Industry statistics revealed that small and medium-sized businesses (SMEs) producing the 200 series stainless steel flat products—the goods that Chinese producers are dumping—are only functioning at 30% of their capacity. The utilization of these businesses’ 1.5 million tonnes (mt) capacity by the end of March was the lowest in the previous six years, at less than one-third.

Domestic steelmakers are freezing hiring and expansion plans due to cheap imports, particularly from China. India removed a 19% CVD in the Union Budget 2021-22, citing the rise in China’s contribution to stainless steel imports, impacting SMEs. The steel ministry supports the duty to protect local industries.

CVD implementation could benefit 500 SMEs and 60 producing companies, generating employment for over 400,000 people. These units, mainly in Gujarat, Himachal Pradesh, and Delhi, have stopped production or reduced capacity due to cheap imports. China’s 200 series stainless steel is 30% cheaper than domestic steel, with government subsidies.