Stainless steel industry

Stainless Steel has emerged as one of the finest breeds of steel in India and this has seen a wide scale appreciation from different sectors owing to its extravagant properties. However, the Indian Stainless Steel (SS) industry has been fighting with its own set of problems, which if not addressed may affect the growth of this industry.

NC Mathur, President, ISSDA
NC Mathur, President, ISSDA

Team Steel 360 talked to one of the Industry veterans Mr. N C Mathur, President, Indian Stainless Steel Development Association (ISSDA). Mr. Marthur has been voicing the concerns of this industry in different forums. While talking to our Team he highlighted some of the issues faced by the industry and how proper policy actions can help this industry to remain competitive.

The Indian stainless steel industry is quite young as compared to other countries and therefore needs special attention from the policy makers. This industry produces only 3-4% of the total steel produced in India, whereas its contribution to the revenue of the government stands at around 10-12% of the total steel industry. Thus, it is essential to support the growth of such high value steel products in our country.

Cheaper Imports: A Concern

As per our study, the domestic Stainless Steel industry is facing threat from cheaper imports of Stainless Steel Flat products. Presently India imports around 40,000 MT of Stainless Steel products on an average every month of which around 50% of these imports are mainly from China.



Recently the Finance ministry announced a hike in import duty for Stainless Steel Coils to 7.5 % from 5% in order to curb increasing imports from foreign countries. There has been a surge in imports of stainless steel coils mainly from China owing to lower import duties prevailing in India. Peer countries like Brazil & China impose around 14% and 10% import duty respectively for imports of stainless products, whereas India imposed only 7.5% duty making domestic manufacturers vulnerable to unfair competition.

Indian Stainless Steel industry which has an installed capacity of 4.5 MnT per annum is currently operating at 60-70% utilization level. Out of the total production of 2.6 MnT, it produces around 80% Flat products and 20% Long products. As per industry estimates, imports of SS-300 & SS-200 series from China have been quite significant and possibly this has added on to the woes of domestic manufacturers.

Industry experts believe that raising the Import duty on Stainless Steel coils to around 10-12% will at least give domestic manufacturers a level playing field. As per ISSDA, the imports today comprise of 30% market share of the total SS Flat products in India. In addition to this, the industry is also facing difficulties in supply of key raw materials.

Battling Raw Material Concerns

As per our interaction with Mr. Mathur, procuring raw materials at competitive prices is one of the prime concerns of the industry. Around 60-70% Stainless Steel is produced through recycling and this has led to a higher degree of dependence on Scrap products mainly SS Scraps. Frequent requests by industry bodies for removal of import duty on SS Scrap have remained unheard by the policy makers.

The imposition of 2.5 % import duty on steel scrap increases the input prices of stainless steel thereby reducing the realization of finished products for the manufacturers. Comparing this to China, the import duties on important raw materials and scrap is almost nil, which gives Chinese manufacturers and edge over Indian manufacturers in the international market.

Indian policy makers should take proactive measures to prevent cheaper imports of finished SS Coils and encourage domestic manufacturing of Stainless Steel , which will make this industry self sustainable.