CAPITAL GOODS INDUSTRY WRITES TO PM AND STEEL MINISTER AGAINST EXCESSIVE PROTECTIONISM TO STEEL SECTOR IN THE COUNTRY

On Feb 8, 2016

CAPITAL GOODS INDUSTRY WRITES TO PM AND STEEL MINISTER AGAINST EXCESSIVE PROTECTIONISM TO STEEL SECTOR IN THE COUNTRY

OVER PROTECTIONISM INCLUDING CURBS ON STEEL AND STAINLES STEEL IMPORTS AND IMPOSITION OF MINIMUM IMPORT PRICE (MIP) TO HIT CAPITAL GOODS INDUSTRY AND DOWN STREAM SECTOR MSME’s

New Delhi February 8, 2016 Process Plant and Machinery Association of India (PPMAI) and apex body representing the Process Plant Manufacturers in the country have written to Prime Minister Narendra Modi against excessive protectionism including imposition of Minimum Import Price (MIP) being given to the steel sector in the country .

Process Plant and Machinery manufacturers which include major companies include Larsen & Toubro(L&T) , Godrej, Thermax, Praj Industries, Aker Solutions, Toyo Engineering., ThyssenKrupp Industrial Solutions (India). (UHDE), Ion Exchange and BGR Energy Systems have strongly objected and expressed serious concern at perpetual protectionist environment being created excessively in favour of steel sector in the country without consulting the capital goods and industry sector.

“India is in the process of globalizing its manufacturing base through establishment of Capital Equipment and downstream industries in MSME to generate employment as well as boost Make in India vision through competitiveness of Indian products. However, government must also be understood that this goal is endangered if our industrial and trade policies are based on narrow perspectives of PROTECTIONISM FOR ONE individual industry. India should not be seen as a protectionist nation with unpredictable policies.” Said Mr V P Ramachandran, Secretary, Process Plant and Machinery Association of India (PPMAI) .

“If steel industry including stainless steel is favoured with so much of excessive protectionism including curb on imports with anti dumping duties and additional safe guard duties and latest Minimum Import Price (MIP) in this competitive world, it will end up as a burden on the economy and scare away investors in other productive Capital Equipment as well as downstream MSME areas which have the potential to run efficiently and grow without support and develop export markets and most importantly generate employment for the youth in our nation.” Said Mr Ramachandran .

“Government has already provided enough protection to steel industry through high imports duties, Rupee devaluation by over 50% and trade barriers such as anti-dumping or safeguard duties. In a deregulated environment government is taking away capital goods industries right to access the required quality of raw materials and intermediates at competitive prices.”” He said .

“ Why only steel sector alone which is about 80 -90 per cent family owned business in the country is being taken care of and that too at the prospect of killing the downstream capital goods & MSME sector who are the backbone to make in India theme. The recent proposal by Government to impose Minimum Import Price (MIP) for steel products without discussing with all the stake holders will further create confusion if arbitrary price is fixed and will hit domestic industry if asked to follow prices”added Mr Ramachandran.

“The current high import duties are also inverted. this basically protects the steel industry but hurts the business operations of downstream value added producers. thus, the steel industry can face lack of domestic demand if the closure of downstream sector happens in near future. Government must therefore look at the big picture and not sacrifice the Capital Goods and MSME sectors to protect the business interests of steel producers alone.” Ramachandran said.

“PPMAI urges the government to make the duty structure logical and bring down the import duties on semis and intermediates like Hot and Cold rolled carbon steel and stainless steel to the original rate of 5%. if China , Korea & Japan are dumping at low price , start anti dumping investigations instead of further protection through import curbs asIndian Economy is not only steel sector alone ”he said.

Thanking you,

Very truly yours,

For Process Plant & Machinery Association of India

PPMAI/PM/APPEAL/2016

7 December 2016

Shri. Narendra Modi,

Hon’ble Prime Minister of India

South Block, Raisina Hill,

New Delhi – 110011

Subject : Capital Equipment Sector & MSME appeal to STOP EXCESSIVE PROTECTIONISM TO STEEL SECTOR . WHY KILL THE DOWNSTREAM SECTOR

Respected Hon’ble Prime Minister,

We, the Process Plant and Machinery Association of India (PPMAI) are a 50-years-old Association representing the Process Plant Manufacturers all over India which includes corporate like Larsen & Toubro Ltd., Godrej, Thermax Ltd., Praj Industries Ltd., Aker Solutions, Toyo Engineering India Pvt. Ltd., ThyssenKrupp Industrial Solutions (India) Pvt. Ltd. (UHDE), Ion Exchange, BGR Energy Systems Ltd., etc., to name a few. The membership consists of:

Consulting Engineers & Engineering Procurement & Construction Management Companies
Engineering Procurement & Construction Contractors
Equipment Manufacturers & Fabrication Companies
Project Construction Contracting Companies
Inspection & Quality Assurance Companies

On the subject of perpetual protectionist environment being created EXCESSIVELY in favour of steel sector, we have our serious reservations and our comments are as follows:

India is in the process of globalizing its manufacturing base through establishment of Capital Equipment and downstream industries in MSME to generate employment as well as boost Make in India vision through competitiveness of Indian products.

However, it must also be understood that this goal is endangered if our industrial and trade policies are based on narrow perspectives of PROTECTIONISM FOR ONE individual industry. India should not be seen as a protectionist nation with unpredictable policies. If steel industry is FAVOURED WITH SO MUCH OF EXCESSIVE PROTECTIONISM, it will end up as a burden on the economy and scare away investors in other productive Capital Equipment as well as downstream MSME areas which have the potential to run efficiently and grow without support and develop export markets and most importantly generate employment for the youth in our nation.

Government has already provided enough protection to steel industry through high imports duties, Rupee devaluation by over 50% and trade barriers such as anti-dumping or safeguard duties and latest imposition of Minimum Import Price (MIP) . In a deregulated environment you are taking away our right to access the required quality of raw materials and intermediates at competitive prices. WHY STEEL SECTOR ALONE IS BEING TAKEN CARE OF and that too at the PROSPECT of KILLING THE DOWNSTREAM CAPITAL GOODS & MSME SECTOR who are the backbone to MAKE IN INDIA theme.

Now we hear from media about the Minimum Import Price for steel products. PLEASE DO NOT DO THIS TILL YOU DISCUSS THIS SUBJECT WITH ALL STAKEHOLDERS. THERE WILL BE CONFUSION AND DISRUPTION IF ANY ARBITRARY PRICE IS FIXED. FURTHERMORE WILL THE DOMESTIC INDUSTRY BE ALSO ASKED TO FOLLOW THOSE PRICES?

The current high import duties are also inverted. This basically PROTECTS THE STEEL Industry but hurts the business operations of downstream value added producers. Thus, the steel industry can face lack of domestic demand if the closure of downstream sector happens in near future. Government must therefore look at the big picture and not sacrifice the Capital Goods and MSME sectors to protect the business interests of steel producers alone.

We appeal to the government to make the duty structure logical and bring down the import duties on semis and intermediates like Hot and Cold rolled carbon steel and stainless steel to the original rate of 5%. IF CHINA , KOREA & JAPAN ARE DUMPING AT LOW PRICE , START ANTI DUMPING INVESTIGATIONS .

We therefore appeal that any request for further protection through any increase in imports be rejected to avoid serious implications on trade and industrial growth of downstream end user sectors.

We are sure HON’BLE PRIME MINISTER, COMMERCE MINISTER AND FINANCE MINISTER will heed to our appeal to INVOLVE ALL STAKEHOLDERS IN SUCH DECISION MAKING. INDIAN ECONOMY DOES NOT MEAN STEEL SECTOR ONLY.

Thanking you,

Very truly yours,

For Process Plant & Machinery Association of India