According to newspaper reports, the United States International Trade Commission has imposed a 72% final countervailing duty and anti dumping duty on imports of certain types of steel plates from five countries including India. The Steel Authority of India (SAIL) is likely to be worst affected.
SAIL is the world's 10th largest and India's largest steel manufacturer. It operates 4 integrated steel plants and 2 speciality steel plants. The company has been on the brink of bankruptcy for some time now. It is attempting to raise resources by getting rid of its loss making units.
SAIL is a large exporter of steel plates to the US and as a consequence it is expected to be the worst hit. During 1HFY00 the company exported 135,000 tonnes of steel plates. The newspaper report has stated that SAIL is likely to post an export loss of Rs 6 bn due to this ruling.
The decision by the US authorities is likely to come as a blow to Indian steel producers that had taken to exporting to US markets in view of the import curbs imposed by the European Union. A slowdown in exports could derail the recovery process in the domestic markets as producers are forced to dump their stocks locally.
Further to this, the Indian government's decision to remove floor prices on the import of steel in the near future could further worsen the situation. In view of this, the government needs to rework its strategy of combating global competition while staying within the purview of the guidelines issued by the World Trade Organisation (WTO).
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