Need not give pref­er­ence to do­mes­tic steel cos as they’re jack­ing up prices, says GAIL

Resource Digest - - CONTENT -

State-run firm GAIL (In­dia) has spo­ken against the pref­er­ence given to do­mes­tic steel when it comes to gov­ern­ment pro­cure­ment. Pro­tected by high tar­iffs which keep im­ports at bay, do­mes­tic steel firms are jack­ing up prices, the gas mar­keter al­leged, in a re­cent con­sumer griev­ance re­dres­sal meet­ing con­vened by the steel min­istry. Cur­rently, do­mes­tic steel prices are gen­er­ally cheaper than landed cost of im­ports by 5-6%; how­ever, sources said, the lo­cal steel­mak­ers quote even higher prices against ten­ders floated by the likes of GAIL, in­flat­ing their project costs, tak­ing ad­van­tage of the pol­icy that state-run en­ti­ties should prefer­ably buy do­mes­ti­cally man­u­fac­tured iron and steel.

GAIL’S rep­re­sen­ta­tive said at the griev­ance re­dres­sal fo­rum on Septem­ber 14: “The quoted prices of L1 bid­der (for the new ten­der) are on much higher side as com­pared to low­est prices dis­cov­ered from pre­vi­ous ten­der for sup­ply of bare/coat­ing/ coated steel line pipes of API grade for Jagdish­pur-hal­dia­bokaro-dharma Steel Dharma pipe­line Project. This has im­pli­ca­tion on project cost.” Ac­cord­ing to a pol­icy ap­pli­ca­ble on all gov­ern­ment ten­ders, if an ag­grieved buyer reg­is­ters a com­pli­ant, a com­mit­tee set up un­der the steel min­istry shall dis­pose it of in four weeks.

The pol­icy favour­ing do­mes­ti­cally man­u­fac­tured iron and steel was ap­proved by the Cab­i­net in May this year “with ob­jec­tive of na­tion-build­ing and en­cour­ag­ing do­mes­tic man­u­fac­tur­ing”. Pro­vid­ing cush­ion to the strug­gling do­mes­tic steel in­dus­try from bur­geon­ing im­ports was an­other rea­son for for­mu­lat­ing the pol­icy. Since the be­gin­ning of last year, the steel min­istry has come to the aid of the do­mes­tic steel in­dus­try, pro­vid­ing it with both tariff and non-tariff pro­tec­tions in­clud­ing anti-dump­ing duty on a host a prod­ucts. As a re­sult, In­dia’s im­port of steel de­clined by over 36% to 7.4 mil­lion tonne (mt) in 2016-17. Dur­ing the April-au­gust pe­riod of the cur­rent fis­cal, im­ports grew by 16% to 3.45 mt; some of the pro­tec­tive mea­sures like min­i­mum im­port price were with­drawn. At­tempts are also be­ing made by the steel min­istry to en­sure steady sup­ply of iron ore at cheaper costs to steel units, though these haven’t been suc­cess­ful, fol­low­ing strong ob­jec­tion from min­ers and the mines min­istry.

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