Despite a proposal from trade officials and pressure from local steel industries, India will not apply countervailing tax (CVD) on specific steel goods imported from China.
According to the official from the finance ministry who was personally involved in the decision, the ministry would reject the Directorate General of Trade Remedies (DGTR) suggestion to apply 18.95% CVD on specific flat-rolled steel goods imported from China for five years.
The finance ministry’s policy, which can affect local steel producers, attempts to shield steel-consuming companies from price increases. The industries in the country importing the goods are damaged by CVDs, which are additional taxes imposed on imported goods or items that are subsidised in their native country.
According to WTO regulations, a member state may levy an anti-subsidy duty if the government of a trading partner is providing subsidies for a product.
A petition to reinstate CVD for another five years was supported by more than 170 Indian steel businesses, including Jindal Stainless Ltd. and Steel Authority of India. CVD by India on such Chinese imports was abolished in February of last year.
The official claimed that, at a time when India’s economy was rapidly but unevenly recovering, applying CVD would have harmed small and medium-sized consumers while benefiting a select few huge enterprises.
The move will support Chinese shipments even more at a time when the biggest country in Asia is on track to export the most steel in 2017 since 2016, having already benefited from low prices and a weaker currency in the face of poor domestic demand.