Analysis: Indian steel community mulls impact of compulsory registration of imports

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India’s steel community is weighing the government’s move to make it compulsory for steel importers to register their shipments under a Steel Import Monitoring System (SIMS) that was introduced by the Directorate General of Foreign Trade.

Indian mills are known to have pushed the government for the past three years to have such a monitoring and surveillance mechanism in place in India, similar to that of the Steel Import Monitoring and Analysis (SIMA) enforced bythe US Department of Commerce. SIMS is likely to make public data on steel imports prior to the entry of such imports into India, except for some proprietary information.

“This will lead to better monitoring of imports…and it is not vigilance,” a Mumbai-based mill source said.

The new system is likely to benefit Indian mills more than traders as data on future trends in volume and prices of steel imports expected to enter the Indian steel market will be known in advance, sources said. Such information would help the Indian domestic steel industry in responding to the market conditions in a more dynamic manner, such as the case of imports from Iran in recent months as well as building a case for imposition of other duties.

“This won’t change things much…(the) problem is within India, [and] not outside India,” another Mumbai-based mill source said, pointing at the weak domestic steel market in India.

The import policy for about 284 items “has been revised from ‘free’ to ‘free’ subject to compulsory registration under Steel Import Monitoring System (SIMS),” the directorate, which comes under the Ministry of Commerce and Industry, said.

Several market participants confirmed to S&P Global Platts that there is a lack of discussion about such government orders, which is likely to act as a non-tariff barrier that will increase the number of steps to be taken prior to the process of importing.

“The general reaction is that it probably won’t harm imports other than slowing down the process…it will all depend on implementation,” a Singapore-based trader said.

Online registration will be available from September 16, while SIMS is expected to take effect from November 1. Included in the 284 items under Chapter 72 and Chapter 73 are several flat-rolled products, certain items of springs andleaves for springs of iron and steel; diesel-electric locomotives; and some railway parts.

“The importer can apply for registration not earlier than 60th day and not later than 15th day before the expecteddate of arrival of import consignment,” the directorate said.

“The wrong declaration of [imported] goods will be a problem [now],” a pipe-maker in the northern India said.

Nonetheless, several market participants expressed doubts over the kind of data that will be made available in thepublic domain, if the system is modeled on SIMA.

The purpose of the SIMA system, according to the website of the US Department of Commerce, is to provide steel producers, steel consumers, importers and the general public with accurate and timely information on anticipated importsof certain steel products.

MARKET CONCERNED ABOUT REGISTRATION SYSTEM
In particular, any business importing steel mill products covered under the licensing program is required to procure the license. This includes importers, importing agents or brokers. The aggregate data collected from the licenses are made available to the public following review by the relevant authorities.

“This is just a first step…They have got to grasp who it affects in the Indian domestic market,” a Japanese trader said. “This can be a trigger to putting up tariff barriers.”

Another Japanese trader said: “This will lead to one more small compliance for the importer and very much against the policy of the government to promote ‘ease of doing business.’ This is one more impediment.”

“The government will gain real-time data for imports because the registration of contracts will happen before cargo arrival and the government can access the data to check any surge in imports and can take corrective action,” the second Japanese trader said.

“In short, this will be an extra tool in the hands of the government to check any surge in imports. It is not onlyapplicable to steel but to all imports on given HS codes. Therefore, this notification should not be read as steel specific,” the trader said. The 284 items include ferrous scrap.

Market participants were also unsure about how various trading tactics may have to be altered to comply with the initiative. The registration process is likely to be handled by DGFT, which would allot registration numbers with a validity period and which must be included in the Bill of Entry, while the Ministry of Steel could get access to the information and publish the same.

“What if I [want to] purchase on high seas only one week before arrival?” a Mumbai-based importer said.

The Indian Steel Association did not respond to queries from Platts about the change in the import policy.

“This time our steel guys failed to prove to the government that imports have caused injury to them…thereby derailing implementation of SG [safeguard] duty,” a pipe-maker in the western region said, adding that data in the public domain will help Indian mills substantiate their case.

The registration system comes as India reverted to being a net importer of finished steel after two years as a netexporter. For fiscal year ended March 2019, annual steel imports increased 4.7% year on year to 7.83 million mt, while exports plunged 33.9% to 6.36 million mt.

Source: Platts

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