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India seeks to ensure FTA sops aren’t used for dumping steel

India is banking on inclusion of ‘melt and pour’ conditions to protect the domestic steel industry in free trade agreements (FTAs), steel secretary Nagendra Nath Sinha told ET.

This provision ensures that any steel which benefits from tariff concessions under FTAs ​​is manufactured only in the countries that have an arrangement with India. It helps curtail attempts to use FTA countries as transit points to dump steel, from non-FTA ones, such as China, into India.

“We are negotiating for ‘melt and pour’ as the product specific rules of origin… This provision ensures that FTA benefits are available only to genuine manufacturers in other countries rather than those who re-route their products to India,” Sinha said.

FTA negotiations are currently underway with the United Kingdom, the European Union and Canada. The ‘melt and pour’ provision is also part of the India-Australia Economic Cooperation and Trade Agreement, which came into force in December 2022.

India Seeks to Ensure FTA Sops aren't Used for Dumping Steel

Domestic steel manufacturers have been cautious about India’s trade deals that may open the flood gates for cheap imports and outprice local players. These companies bank on tariff barriers to remain profitable.

But the battle is not just on the domestic front. Europe’s Carbon Border Adjustment Mechanism (CBAM) also threatens to dampen prospects for Indian steel companies. Sinha said, in response to a question on CBAM, “Carbon-efficient steel exporters from India may not be impacted. Government is examining the regulations based on which a coordinated response will be planned.”

Sinha said it is a regulatory measure meant to avoid carbon leakage in the EU when the grouping takes action to fulfill its climate commitments. “CBAM is to present only a reporting mechanism up to December 2025,” he said.

India aims to scale up its local steel manufacturing by 2030 under the National Steel Policy (NSP) 2017. Crude steel production of the country stood at 126.26 million tonnes in 2023-23, against an installed capacity of 161.3 mt.

According to Sinha, the NSP goals will be met on the back of higher demand as the economy grows. “India is the lone bright spot in the world… the vision to reach 300 million tonnes of crude steel capacity by 2030 from the present level of 161 million tonnes seems achievable,” he said.

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