MIP “not a savior” for Steel anymore
Recently Indian
Government has increased the Minimum Import Rate (MIP) on 66 items
which was earlier applied on 176 items with the stretch of Two
months. The latest proposition was last nail on the coffin of already
sinking ship of Steel Industry in India. It’s been a while that
Indian Steel Industry has been suffering a downfall as the price of
steel is gradually decreasing. The major reason behind the crashing
down of steel price is that it has not been able to match up with the
steel imports from China, Japan and South Korea which is
comparatively cheaper than Indian Steel import. Top notch Indian
organization of Steel i.e. SAIL, TATA Steel, ESW Steel and ESSAR
Steel has held government as the last assurance to take a
protectionist measure on cheap import of steel.
The current MIP can be
a temporary cure but it will not be helpful in the long run because
it will only run for two months and such short span of time is not
enough to unburden the monetary losses that steel industry is facing
currently. The biggest question here is what would be the next step
after the winding up of MIP because the major player of steel will
lose their only advantage and the disposition will again start. The
long term solution in present scenario will be adoption of
anti-dumping duty though certain improvement has implemented recently
by the government of India.
The weakening of Steel
Industry will not only affect the economy but also the bank as
considering the fact that steel industry has huge amount of loan and
being the highest contributor of country’s non-performing assets
(NPA’s) , the given MIP is not sufficient to improve the status of
debt. Hence, to reform the steel industry and saving from high debts,
the MIP of two month is not enough.
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