SME Times News Bureau | 26 Jun, 2009
Exporters of engineering goods have opposed the Directorate General of Safeguards' recommendations to levy safeguard duty on steel imports, saying the move will hurt the Micro Small and Medium Enterprises (MSME) sector as domestic prices may rise further.

The Directorate General of Safeguards has recommended a 25 percent duty on import of hot rolled coils/sheets, including the Cost Insurance Freeight Value of USD 600 per tonne to protect the domestic industry against cheap imports.

"In such a scenario, the 25 percent safeguard duty will only undermine the ability of the MSME sector to be competitive in world markets," the Engineering Export Promotion Council (EEPC) said in a statement.

India's engineering exports is concentrated in the MSME sector, which account for nearly 38 percent of USD 38 billion of shipments. The sector's key competence is in the export of low value-added items, hence, lower input costs is important for maintaining competitiveness in global markets.

Steel makers Essar and Ispat Industries had filed a petition for imposition of the safeguard duty and the same was supported by SAIL and JSW Steel.

The level of prices in domestic market is the key factor for the small-scale manufacturers and exporters fear that the imposition of the duty could lead to domestic prices going up.

According to data provided by the EEPC, in May 2009, HR coils cost USD 661 per tonne, cheaper only to Brazil where the products cost $966 a tonne.