India: Inclusion of steel in RCEP talks worries industry captains

  • The inclusion of steel in India’s Regional Comprehensive Economic Partnership (RCEP) negotiations that propose to extend free trade agreements to China will excessively harm the local steel industry by opening floodgates to Chinese imports from the largest steel producing nation.
  • Industry captains and experts have called on the government to “exercise caution” while finalising the multilateral trade agreement.
  • “Our plea is that even if RCEP negotiations are finalised, Indian steel industry which has suffered in the past even under the current FTA arrangements with 13 countries, should be excluded from its purview,” Seshagiri Rao, joint MD at JSW Steel, told ET.
  • “We sincerely hope the proposed review of India-Asean FTA would help in addressing the growing asymmetry in bilateral trade in goods between the two regions, ensure less violation of Rules of Origin (RoO) and enable better utilisation of the FTA by the Indian Industry,” said TV Narendran, MD at Tata Steel adding that in the last 10 years, imports have grown faster than exports.
  • RCEP could increase the number of countries where India can export without duties. Some analysts said long term demand from India may be capped at around 150 million tonnes and in that case, regional peers could help with demand creation. Experts said there is little to gain for India as no other country generates as much demand as India.
  • Another factor is competitiveness. Cost of manufacturing steel in India is higher by at least USD80 per tonne owing to high embedded costs like logistic and infrastructure, among others, which makes finished steel goods less competitive compared to Chinese goods.

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