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Small and medium enterprises producing 200 series stainless steel flat products were operating at less than a third of their 1.5 million tonne (mt) capacity as of the end of March, the lowest utilization level in the past six years, according to industry data shared with the government and reviewed by Mint.
“Imports from China are cheaper and have led to a decline in demand for our products, which has impacted profitability and led to direct and indirect job losses over time. The situation remains grim during the current year, too,” an industry executive familiar with the issue said, requesting anonymity.
The person said medium, small, and micro enterprises (MSMEs) in this segment produce about 35% of the total requirement and are crucial to the sector’s growth in the country. Industry estimates show there are 500 units (and about 60 producing companies) with a capacity of about 1.5 mt, generating direct and indirect employment of more than 400,000 people. These units are located mainly in Gujarat, Himachal Pradesh, and around Delhi.
“Imports from China are cheap since they are subsidized in their home country, making our produce uncompetitive. Hence, it becomes difficult for us to compete, leading to a growing demand for the announcement of countervailing duty on such imports,” said a second person, who also did not want to be identified.
About 25-30% of demand in the year ended 31 March 2023 was met by Chinese imports, which are about 30-40% cheaper than the Indian product on the back of about 20% subsidies provided in their home country. China’s market share was 10-15% in FY21, the person added.
The steel ministry has endorsed the demand for countervailing duty, which is expected to be announced by the finance ministry based on recommendations from the Directorate General of Trade Remedies (DGTR). DGTR has recommended a 19% countervailing duty on stainless steel.
“The impact of a few countries dumping their products has impacted the small and medium enterprises badly, and their capacity has gone down by half. The countervailing duty will help arrest their decline any further,” said a top executive at a steel major, who did not want to be identified.