Even as the Indian government, led by the Directorate General of Trade Remedies (DGTR), examines the imposition of a 25 percent safeguard duty on steel imports, the ministry of commerce is working on a mechanism to insulate steel consumers in micro, small and medium enterprises (MSMEs) from any impact of resultant price rises in domestic supplies, government sources said on Wednesday, February 19.
"We are working on a 'backstop' for MSMEs, that is offering steel consumers in the latter segment a window or support system wherein they would be able to continue to access steel for their manufacturing activities at competitive prices, like currently imports at lower prices," the sources said.
One of the options under consideration for such support to MSMEs by the commerce ministry is directing domestic steel mills to commit supplies to MSME units at a price benchmarked to their export price, the sources said.
A second option also under consideration is directing local mills to make allocations of specific grades of steel in demand from MSMEs which would be priced benchmarked to the landed price of imports excluding the 25 percent safeguard duty, wherein the smaller consumer would have access to local steel at an import parity price, the sources said.
However, the sources acknowledged that it was a challenge to devise a mechanism that would ensure MSME steel buyers a lower price, but also ensure that this material does not go into onward sales in the market.
The Engineering Export Promotion Council (EEPC), the representative body of engineering goods exporters from the country, could help in a limited way to resolve this issue by certifying MSME manufacturers on their actual end use of steel, but it will not be possible to ensure 100 per leakage-proof, EEPC chairman Pankaj Chadha said.
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