DOMESTIC steel companies’ decision to seek a hike in import duty on steel from 5% to 15% has divided the industry right down the middle. A day after domestic steel companies appealed to the government to raise imports duties, the Association of Indian Forging Industry (AIFI) an apex industry body, has said it is shocked by the move. AIFI feels it will lead to a spike in domestic steel prices and has urged the government against taking a decision to hike import duty on steel.

   According to the association, any move to raise import duty on steel will have a two-fold impact. It will render auto-component manufacturers uncompetitive since price of steel in India is higher than ex-factory prices internationally. It will also lead to more job losses in the industry, which is already reeling under poor demand, AIFI said in a statement. AIFI has urged the government to ensure steel prices remain at the current low international levels so that Indian autocomponent makers can regain their export competitiveness. In 2006-07, the forgings industry exports grew 23% to reach $360 million. The figure is expected to be over $430 million in 2007-08.

   The forging industry, which includes 200 organised and some 1,000 unorganised players, is categorised into four main sectors — large, medium, small and tiny. However, bulk of the industry consists of small and medium units.

Published in The Economic Times dated. 24.1.2009.