By Our Correspondent
NEW DELHI/BHUBANESWAR: With high premium Odisha mining auction continued to hit headlines and Supreme Court advocate Manohar Lal Sharma serving legal notices to Naveen Patnaik led Government in Odisha as well as Union Government , the Federation of Indian Mineral Industries (FIMI) has written to the Prime Minister Narendra Modi and Union Steel-PNG Minister Dharmendra Pradhan requesting a price monitoring and regulation mechanism for the sale of the alloy by these producers. FIMI Secretary General RK Sharma his letter demanded for a price monitoring and regulation mechanism for sale of steel by integrated steel producers.
“We wish to draw your kind attention to the steep increase in domestic steel prices in recent months and plans to further hike it, which is leading to windfall gains by few steel companies at the cost of entire Indian economy, including upstream mining industry and downstream user industries. We also enclose our representation dated 12th May, 2020 highlighting in detail how undue protection to steel industry has been adversely affecting the entire country,” the letter said, copy of which is available with www.indianewsdiary.com.
“You are kindly aware that subsequent to auction, the integrated steel players have now got their own iron-ore mining leases post-31st March 2020. Having secured sufficient raw material for their own steel plants, they are now taking the plea of high international iron-ore prices to hike steel prices in India, while they are not dependent on international iron-ore for making steel. This is despite the fact that 162 million tonnes of iron-ore, mainly of +58%Fe to 62%Fe, has been lying unused in the country for decades due to non-lifting of such ore by steel industry. Further, the steel industry has been able to ensure that 30% export duty on +58% Fe continues to make its export unviable, despite the fact that it selectively consumes +62%Fe high grade iron-ore,”it said.
“ While the steel industry advocates and uses trade barrier (export duty on iron ore) to squeeze the mining industry, it advocates free market for domestic sale of steel at par with international prices. Consequently, the high price of steel in India has deprived domestic consumers common usage of steel and is the prime reason for the low per capita consumption of steel in India at 74 kgs compared to 208 kgs globally,” the letter said.
“ Hypocrisy of the integrated steel players can be clearly observed from the fact that they clamour for sale of steel at par with international steel prices, whereas they enjoy undue protection from international competition through several measures including import duty @ 15% on steel, minimum import price, anti-dumping and countervailing duties, etc. Further, in all Government procurements, there is a preference to domestically manufactured steel products at a price higher than good quality imported steel products. It means that for the sake of benefiting few steel producers, the exchequer and taxpayers have to pay more,” it said.
“All these protectionist measures have helped few steel players to make windfall profits, while artificially hiking the cost for downstream industries and consumers, thereby leading to subdued demand and stunted economic growth. The artificially inflated steel price has also led to higher cost of infrastructure and construction projects both in private and public sector.Just as iron ore is a raw material for steel, steel is raw material for downstreamengineering and various other products, many of which are exported. High price of steel in India has deprived many downstream products their competitive edge in the international market. If the steel industry is protected by Government from international competition, then it must pass on the benefits to downstream sectors, or else the import duty on steel and its various products should be removed to bring parity. Hence, there is an urgent need to monitor and regulate the price of steel in India for boosting economic activities throughout the economy, as steel is a major input for all sectors, private and public,”it said.
“ In view of the above, we request your urgent intervention for introducing a price monitoring and regulation mechanism for sale of steel by integrated steel producers, so as to ensure that there is no unreasonable hike in domestic steel prices due to any increase in international iron ore prices, since the integrated steel players have got their own mines and not dependent upon imported iron ore. We also request for complete withdrawal of import duty on steel, so as to benefit the downstream industries and Indian citizens at large,” the letter added.
Sajjan Jindal-led JSW Steel has bagged four iron ore mines in Odisha during the auctions held by state government on February 6.With this, all the primary steel producers, which includes, Tata Steel, state-owned Steel Authority of India (SAIL) and AM/NS India now have captive ore mines in the country. Coking coal and iron ore are the key raw materials used in the making of steel.Meanwhile, industry officials were of the view that current domestic price of steel is already very high compared to the cost of production of the alloy in the country.
