The anti­Dumping laws in steel ­good or bad?

10-Jun-2016 08:26 am 0

Chinese steel comprises of 33% of our total steel imports. It has increased 230% in the last year itself. Chinese steel is exported at around 300USD per tonne. Indian steel is sold at around 450 USD per tonne and that too at a low margin of profit. it’s not our inefficiency but the fact that Chinese manufacturers are selling at a price lesser than the cost of production. This is called dumping and Indian government has made many laws and increased import duties to avoid dumping. But the Chinese are actually operating at a loss and why would they do that?

This can be traced back to the Marxist thinking which is still prevalent in some Chinese sectors, steel being one of them. Almost every steel mill in china is owned by members of the communist party. Their move up the party is measured by many parameters like their own contribution to the increase in GDP, which is measured in Yuans. An easy way to do this was supposed to be supporting investment in steel. This led to a situation that went out of control and now they have surplus steel which has to be exported, even if it is at a price lower than the cost of production.

The surplus steel is being exported or dumped worldwide. In UK, it had already led to a collapse of its domestic steel industry. Chinese steel exports only account 8% of the total exported steel to UK and the impact on the domestic industry is drastic. UK is putting as many barriers it can for the Chinese steel.  Just imagine if this steel found its way to India where it is already accounts 33% of the total exports. Domestic players wouldn’t be able to operate at such losses and this would eventually lead to the monopoly of the Chinese in the Indian steel sector. Then they would increase the prices because we now depend on them. Unemployment and chaos will be all around.

But doesn’t low import price a boon from the consumers point of view? If the Chinese mills are operating at a loss, it must be our profit. If the steels cost is less, the industries where steel is used a raw material will operate at more profits, increase their production capacity which is great for our economy. So, Is the government just conspiring with the steel manufacturers and looking out of their interest over the country?

Both the arguments are extreme. They look at just one side, completely ignoring the other view. The first argument doesn’t include the advantages that cheap steel brings on the table to the sectors other than the steel. An exhaustive study is required which can classify the companies that use steel as a raw material and whose impact can be noticeable. The second argument is faulty at many places. One, if the government is imposing high import duty on Chinese steel and it is still cheaper than Indian steel, the government will earn more than what it will earn from the taxes through the industries which are being benefited from cheap steel. This argument is nothing more than a conspiracy which rots internally.

The government has applied duties on cold-rolled flat stainless steel products ranged from 4.6% to 57.4%. Imports from South Korea, South Africa and Thailand were also taxed. Before this anti-dumping duty, the government tried to contain the problem through Minimum import price and was unsuccessful as Chinese steel was still flooding the market. The anti-dumping laws seem like an essential step but our economy can take advantage of this scenario in many ways which need to be studied.

 

 

 

Summary
Article Name
The anti­Dumping laws in steel ­good or bad?
Description
Chinese steel comprises of 33% of our total steel imports. It has increased 230% in the last year itself. Chinese steel is exported at around 300USD per tonne.
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