“MSMEs sound warning over steel import tax increases amid calls for more protection”
As major steel manufacturers push for protective measures citing a rise in Chinese steel imports, many micro, small and medium enterprises (MSMEs) have voiced concerns over any hike in duties on steel inputs. This comes after assurances from Heavy Industries Minister HD Kumaraswamy and Commerce Minister Piyush Goyal to curb cheap Chinese steel entering India during events organized by the Indian Steel Association. Kumaraswamy stated he will request the Finance Ministry to raise import taxes from the current 7.5% to 10-12% to support domestic steelmakers.
However, MSMEs argue this could drive up their costs significantly. Vinod Kumar from the India SME Forum said large steel producers prefer lucrative export orders over prioritizing local MSME needs. With import costs estimated to rise 10-20% from tax hikes, many MSMEs fear they may be forced to close down. Newcom Technologies MD S Hegde echoed such fears, questioning where MSMEs could source materials if further barriers are erected on imports.
Former trade expert Ajay Srivastava noted any border adjustment tax on steel imports proposed to level the playing field may increase overall prices, impacting many industries. It is important to examine steel company finances to understand if issues stem from external or internal factors, he said. In the past, MSMEs also opposed quality control orders on steel as non-tariff barriers that could damage the small business sector. With India becoming a net steel importer last year, the debate around protectionism vs open markets remains ongoing.
