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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