Protectionist Measures on Steel Imports Will Hurt MSMEs: EEPC

Imposing restrictions on steel imports from countries like China could harm Indian engineering goods manufacturers, particularly Micro, Small, and Medium Enterprises (MSMEs), which depend on competitively priced steel, according to Arun Kumar Garodia, Chairman of the Engineering Export Promotion Council of India (EEPC). Large steel producers in India are lobbying for a 15% tariff on steel imports, aligning with similar protectionist calls from the U.S. and European steel sectors in response to rising Chinese steel exports. However, small engineering exporters argue that affordable imported steel is essential for maintaining competitive pricing in both domestic and international markets.

“Keeping domestic steel prices competitive is essential,” Garodia said, emphasizing that the price difference between Chinese and Indian steel helps downstream industries, especially MSMEs, sustain their market edge. EEPC also highlighted a production-consumption gap, with crude steel production up by 4.44% and finished steel production by 5.30% during the first five months of FY 2024-25, while steel consumption surged by 13.78%.

EEPC has formally requested the government to avoid additional tariffs or safeguards on steel imports, warning that increased steel prices would drive up operational expenses for engineering companies and reduce their competitiveness. Data from the Joint Plant Committee (JPC) shows a 31.7% rise in finished steel imports from China, alongside notable increases from Japan (130%), Vietnam (52%), and Korea (6%). While Chinese imports grew, their share of India’s total steel imports declined slightly from 31% to 30.5%, while Japan’s share rose from 14.3% to 24.6%.

EEPC pointed out that rising imports from free trade agreement (FTA) partners, like Japan and Korea, may call for a review of origin criteria under FTAs to ensure they align with India’s broader trade and industry goals.

Disclaimer: This article provides an analysis of the potential impacts of steel import restrictions on MSMEs based on information from the Engineering Export Promotion Council of India (EEPC). It is for general information purposes only and not a substitute for professional or financial advice.