Govt defers decision on safeguard duty on steel items

New Delhi, May 11; In what appears to be a victory for users, the Government has deferred a decision on a proposal to impose provisional safeguard duty on hot rolled coils/sheets/strips. It said the matter needs to be examined further after taking views of the consuming industry.

“We felt that not enough homework had been done and there is a need to consult both the domestic industry and other interested parties concerned. We have asked the Directorate General on Safeguards (DGS) to consult the domestic user industry and come back to the board after 60 days (with recommendations),” Mr G.K. Pillai, Commerce Secretary, told reporters after a meeting of the Standing Board on Safeguards. Mr Pillai heads the board.

The Steel Secretary, Mr P.K. Rastogi, said there was no urgency to consider the safeguard duty. The interim proposals of the DGS were found to be “insufficient”, he noted.

Asked if there could be any injury to the local industry in view of non-imposition of the safeguard duty, Mr Pillai said, “From the evidence we do not see any threat to the industry”. He also highlighted that steel users had brought to the Government’s notice that they had appealed to steelmakers to further reduce steel prices, matching import prices.

“We were expecting a decision. Imports were being allowed at very low prices. The advantage of whatever demand was generated from stimulus package was going to Ukraine and Chinese companies,” a spokesman for Ispat Industries said.

The Director-General (Safeguards) had in April 2009 recommended a provisional safeguard duty of 25 per cent on imports of hot rolled coils/sheets/strips up to the cost, insurance and freight (CIF) value of $600 a tonne, considered a reasonable benchmark.

In India, there are currently five producers who have the capacity to produce hot rolled coils/sheets/strips — Ispat Industries, Essar Steel, JSW Steels, Steel Authority of India and Tata Steel. The petition seeking safeguard duty was filed by Ispat Industries and Essar Steel. JSW Steel and Steel Authority of India had supported the petition.

In its preliminary finding, the Director General (Safeguards) had concluded there has been significant increase in imports at low prices. Also, the volume of imports surged in view of steeply falling import prices.

This has impacted the domestic industry prices, which fell from Rs 40,000 a tonne in April-September 2008 to Rs 26,296 in February 2009, and consequently led to a decrease in profits. In fact, the domestic industry suffered significant financial losses and negative return on capital employed, the DGS had concluded.

From the range of 1,000-8,000 tonnes a month, the volume of lower priced imports had suddenly surged to as high as 97,000 tonnes and 1,30,000 tonnes in January and February 2009 respectively, according to preliminary findings. The domestic industry had argued that in February 2009 itself, about 1 lakh tonnes landed at Mumbai port at an average price of $450 a tonne. The import prices started declining from above $1,000 a tonne in August 2008 and have continued to fall even now.

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Govt extends deadline for exporting non-basmati rice

NEW DELHI: The government on Monday extended a deadline for exporting 55,000 tonnes of non-basmati rice to four African countries by three months, just a few days after the Commerce Ministry gave permission for export of 10 lakh tonnes (one million) of rice to 21 other African countries.

In a statement issued here by the Agriculture ministry said that State Trading Corp of India (STC) would export the rice to Nigeria, Senegal, Ghana and Cameroon by July 30. So far, the agency has only been able to export only a paltry 15,000 tones to Ghana at about $500 per tonne.

According to a Commerce ministry official, the extension was made in response to a request for extension by the STC since there were no fresh import deals of late. The move, however, endorses the reading within the sector that parastatals may prove unequal to the task of striking a deal that is advantageous to India despite the economics for rice export proving positive.

Indian rice, with its price pressured down on account of oversupply and the reluctance of the government to pick up anymore levy supplies, reportedly costs not more than Rs 17,000 or $340 a tonne at the port currently. Better-quality parboiled rice with just 16 per cent brokens can reportedly be sourced from Chhattisgarh for as low as Rs 11,500 a tonne, way below the Rs 14,500 rate payable to mills for levy rice.

And at a low rate of around Rs 11,500, the export cost at Kakinada is pegged by trade at slightly lower than $300. Compared with Thai or even Viet Namese rice (they are the world’s leading rice exporters, producing 70% of global volume) Indian rice is relatively economical. By the first week of May, the benchmark Thai rice price for export fell to $530 a tonne from s $540 due to thin demand, with the planned government stock sale adding to the downward pressure. Apprehensive that prices could plummet further, the Thai government announced last week that it could “revise” a plan to sell 3.76 million tonnes of rice from its stocks.

Last Wednesday, the government had allowed parastastals STC, MMTC and PEC to export one million tonne of non-Basmati (premium, aromatic, long grained rice variety) rice exports to 21 African nations. Curiously, while the exports are apparently on government-to-government account and to be routed through the parastatals, the actual sourcing and shipping are reportedly expected to be sub-contracted to private firms including the Delhi-based Shri Lal Mahal Ltd, Emmsons International and Amira Foods.

That has already set off apprehensions among commodity experts that the private sector may once again end up, cocking a snook at parastatals, raking in the big profits on the first significant steps to open up rice exports totally by doing away with the conditional ban imposed early last year.

A meeting of a committee of secretaries recently decided to open up wheat exports to the tune of two million tonnes to the private sector, a move meant to sponge up as much of the wheat glut in the plunging domestic market for sale outside the country.

In the case of rice, however, the government appears to be deliberately proceeding far more cautiously in completely lifting the blocks to export despite an estimated production of 98.89 million tonnes in the crop year to June.

According to the agriculture ministry, that would be higher by about 2.3 percent compared to last year. But rice stocks with the government have mounted to phenomenal highs, necessitating exports urgently although global rice prices have eased up since early this year based on improved global output prospects. On May 1, India's rice stock rose 66 percent on year to 21.4 million tonnes.

That notwithstanding, the government has been reluctant to make any bold decisions on rice exports in the throes of the general election and persistently high food prices, choosing instead to allow exports on a governmetn-to-governmetn basis to mainly African countries, ostensibly on “humanitarian” considerations. Unlike Western importers such as the EU and USA as well as W Asia, African nations have been big buyers of non Basmati rice varieties.

The imposition of MEP (minimum export price), aimed at preventing more popular non Basmati varieties of domestic consumption from flying out of the country in big quantities and consequently boosting rice prices in the country, hurt the African nations the most. Last year, the FAO urged the Indian government to take the lead in lifting the export bars and easing global rice prices.

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EU may ban Indian groundnut imports due to aflatoxin

Groundnut exporters may find it difficult to make it to European Union (EU) markets. Indian Oilseeds and Produce Export Promotional Council (IOPEPC), earlier known as Indian Oilseeds & Produce Exporters Association (IOPEA), has sounded a red alert to groundnut exporters that EU may ban groundnut imports from India on account of presence of aflatoxin (a kind of fungi).

During an awareness programme on quality upgradation of exportable groundnut at Rajkot, the apex body of oilseed exporters called for a need to generate quality products in India.

“Our future may turn bleak if we fail to fix aflatoxin problem and if we do not maintain the quality of international standard. We must generate quality product not only for India but also for international market.

Indian processors have not taken up technical upgradation and changes in machineries to produce export quality groundnut for a long time,” said Sanjay Shah, chairman, IOPEPC.

“European delegation is scheduled to visit India this September for examining the processes used by export units. If they do not find any changes in the units, they will not hesitate to ban groundnut import from India. Processors know everything about cleanliness and quality norms but they do not follow it,” said D Thara, MD, Gujarat Agro Industries Corporation.

“Changes should be made at APMC level and all the process units and farmers, who supply raw materials, should be registered,” she suggested. “India exports 250,000-275,000 tonnes of groundnuts, mostly from Gujarat. EU constitutes less than 15 per cent of the total groundnut exports from India. If we fail to match EU standard then we should be ready to face ban. Not only that, taking cue from EU, other importing countries might also do the same thing,” said Sanjay Shah.

The European commission will visit India in September to inspect quality standard and compliance of the groundnut processing for human consumption and bird food. Agriculture and Processed Food Products Export Development Authority (Apeda) intends to introduce a new procedure to insure compliance to European quality standards.

The industry needs to be optimistic to introduce and adapt to new system and implement changes as required under Good Manufacturing Practices (GMP). This is the last opportunity for the industry to gear up.

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