India will not impose countervailing duties (CVD) on certain steel products imported from China despite a recommendation from trade officials and lobbying from local steelmakers, a government source told Reuters.

In a rare move, the ministry is to reject the Trade Remedies Branch (DGTR) recommendation to impose an 18.95% CVD on certain flat-rolled steel products imported from China for five years, the official said. of the Ministry of Finance directly involved in the case. , told Reuters.

The finance ministry’s move is intended to protect steel-consuming companies from a price hike, even if it could hurt local steelmakers, the source said.

“Imposing CVDs protects manufacturers, but users end up paying a higher cost,” said the official, who did not wish to be named because a final decision has not been made public. “So you have to balance the interest between users and manufacturers.”

Countervailing duties are additional taxes imposed on imported goods or subsidized products in their country of origin, which harm industries in the country that imports them.

Under World Trade Organization rules, a member country is allowed to impose an anti-subsidy duty if a product is subsidized by the government of its trading partner.

CVDs by India on these Chinese products were removed in February last year and more than 170 Indian steel companies, including Jindal Stainless Ltd and Steel Authority of India, backed a petition to reimpose CVDs for five years additional, according to the DGTR report.

In April, the DGTR – which is the arm of India’s Ministry of Commerce that investigates unfair trade practices – recommended CVD on certain flat stainless steel products.

The Department of Finance rejected the recommendation as steel purchases from China hit a six-year high between April and May, with imports rising 62%.

The official said the imposition of CVDs would have hurt small and medium sized consumer businesses while benefiting a few large conglomerates at a time when India’s economic recovery was rapid but uneven.

The move will further help Chinese shipments at a time when Asia’s biggest economy is on course to export the most steel this year since 2016, as it was already benefiting from a weaker yuan and competitive prices. in a context of weak domestic demand.

India’s Ministry of Finance and Commerce did not immediately respond to emails sent after hours.

Source: Reuters