Steel companies: ‘With the tax, steel companies are forced out of export markets…our loss is China’s gain’
The steel industry is in dialogue with the government to review its “draconian” tax, Oommen said in an interview with ET’s Satish John. The fee could have been levied after a consultation process, he said. If this duty continues, it will be “India’s loss and China’s gain”, said the industry veteran who is also the CEO of ArcelorMittal/Nippon Steel. Edited excerpts:
What do you think of the export duty levied on steel?
The concern of the government would have been to control inflation. But it could have been a consultative process. When the country was facing problems with Covid, (Prime Minister) Modi ji himself had a session with the steel industry and we went out of our way to help by providing oxygen. Also, when Covid hit us, domestic demand was totally destroyed. The whole steel industry would have been in tatters had it not been for the export market. If you look at last year we exported 13.5 million tonnes of finished steel. Where will you find a home for this steel? You have to export it.
Steel companies are doing well given the ongoing commodity bull cycle. Could that have influenced the decision?
Some auto companies made record profits despite the shortage of chips. Because of the Ukrainian crisis, steel prices have gone up because the whole supply chain has been shaken… You can’t totally isolate domestic prices from… what’s happening at scale world. Prior to this announcement, there was already a 10% correction in steel prices. With the reduction in costs that would have occurred with the reduction in import duties on raw materials, prices would have fallen further. We were shouting at the top of our lungs that coking coal prices had gone up 400%. Fortunately, the government looked into the matter. These measures could have contributed to lowering the price of steel. This draconian duty of 15% was not necessary. These export markets were created with great effort. And now, with this duty, we are forced out of these markets. Our loss is China’s gain.
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What happens to existing contracts?
First and foremost, we are calling on the government to reverse its decision. Second, as an interim measure, export duties should be removed from existing contracts. Or who will take the hit? It’s either us or the customer. Either way, it’s unfair.
Is the government listening to feedback?
We are hopeful that the government will listen. We hope the government will bring the steel industry together for a discussion. Let’s find solutions together as we found solutions during the Covid period.