The steel industry is in dialogue with the government to review its “draconian” levy, Oommen said in an interview with ET’s Satish John. The duty could have been levied after a consultative process, he felt. If this duty continues, it will be “India’s loss and China‘s gain,” the industry veteran who is also the CEO of ArcelorMittal/Nippon Steel said. Edited excerpts:
What is your view on the export duty levied on steel?
The government’s concern would have been to tame the inflation. But then it could have been a consultative process. When the country was facing issues with Covid, (Prime Minister) Modi ji himself had a session with the steel industry and we went out of the way to help by supplying oxygen. Also, when Covid hit us, the domestic demand was totally destroyed. The entire steel industry would have been in tatters had it not been for the export market. If you look at last year, we exported 13.5 million tonnes of finished steel. Where will you find a home for this steel? It has to be exported.
Steel companies have been doing well given the ongoing commodity upcycle. Could that have influenced the decision?
There are some automotive companies that have made a record profit in spite of the chip shortage. Because of the Ukraine crisis, steel prices have gone up because the entire supply chain has been shaken up… You cannot have the domestic prices totally isolated from … what’s happening globally. Before this announcement, there was already a 10% correction in the steel prices. With the cost reduction that would have happened with the import duty cut on the raw materials, prices would have further come down. We were crying hoarse that coking coal prices were have gone up by 400%. Thankfully, the government has looked into it. These measures could have helped in bringing down the steel price. There was no need for this draconian 15% duty. These export markets have been created with a lot of effort. And now, with this duty, we are forced to vacate those markets. Our loss is China’s gain.
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What happens to the existing contracts?
First and foremost, we are asking the government to reverse its decision. Secondly, as an interim measure, export duty must be waived on contracts that are in place. Or else who will take the hit? It is either us or the customer. In either case, it is unfair.
Is government listening to feedback?
We are very optimistic that the government will listen. We hope that the government will call the steel industry for a discussion. Let us find solutions together just as we found solutions during the Covid period.