Increase the usage of stainless steel and ensure no dumping takes place
It is a misnomer that the price of Indian companies’ stainless steel is higher, as it is in tandem with the increase in prices of raw materials (mostly imported) and world price.
By Aruna Sharma
Stainless steel has a niche use, different from carbon steel. It can also trigger growth in industrial sector. For instance, we can think of shifting to stainless steel pipes for drinking water network; similarly, for anti-rust long lasting use in infrastructure.
India has a capacity to produce 50 lakh tonnes of stainless steel flats. The consumption per capita is just 2.5 kg, as against the world average of 6 kg per capita. One-third of stainless steel manufacturing capacity is in the MSME sector, and two-thirds between the private (like Jindal Stainless, Shah Alloys, Rimjhim, BRG and Valley Iron) and the public sector (Salem Stainless Steel plant of SAIL). Surprisingly, all of them work at just 60% of their capacity, not due to low demand, but dumping resorted to through imports, especially from China.
The MSMEs, with a capacity of 14 lakh tonnes, do melting and hot/cold rolling for producing steel primarily for household usage (utensils, etc). The use of stainless steel in the supply chain of distribution network of potable water reduces leakage of water by 24%; it is also literary zero-maintenance and is non-carcinogenic. With the current focus on expanding drinking water infrastructure, it is important to choose the right material. Besides, stainless steel is widely used in the automotive sector, railways and transport sector, and is a major capital good in dairying, chemicals, pharmaceutical, food processing, water treatment sectors, as well as nuclear instalments. It also finds usage in elevators, razor blades, surgical instruments and artificial lightweight limbs for differently-abled persons. India, clearly, is on a low-use curve in stainless steel.
The challenge is two-fold. One, to enhance consumption from 2.5 kg to 6 kg per capita, and two, to ensure confidence amongst manufacturers to enhance their capacity. A duty structure must be in place to make sure dumping is minimised and that high-nickel stainless steel does not find its way into Indian markets. The government has been conscious of the same, and the Bureau of Indian Standards is ensuring quality standards not just for imports, but also for domestic products.
The recent announcement of suspending the countervailing duty (CVD) on certain stainless steel products from China and Indonesia has adversely hit the industry, downscaling the expansion plans to become atmanirbhar. The immediate need is to have a holistic approach towards the stainless steel sector by increasing its usage across industries. To trigger further investments, there is a need to withdraw the suspension of CVD on China and also to have CVD on Indonesia.
It is a misnomer that the price of Indian companies’ stainless steel is higher, as it is in tandem with the increase in prices of raw materials (mostly imported) and world price. It is low-margin manufacturing and any jolt with sudden changes in policy adversely affects indigenisation and quality control in the manufacturing of stainless steel. To sum up, increase the usage of stainless steel and ensure no dumping takes place.
The author is a practitioner development economist, and ex-Secretary, GoI