In­dia looks to pro­tect its steel in­dus­try

New Straits Times - - Business World -

In­dia may soon man­date the use of lo­cal steel in gov­ern­ment in­fra­struc­ture projects worth bil­lions of dol­lars, sources said, pitch­ing it as a World Trade Or­gan­i­sa­tion (WTO)-com­pli­ant pro­tec­tion­ist mea­sure aimed at fur­ther cut­ting cheap im­ports, mainly from China.

The gov­ern­ment ex­pects the move to boost sales of lo­cal com­pa­nies, such as JSW Steel and Tata Steel, and even­tu­ally at­tract global steel­mak­ers, such as ArcelorMit­tal and POSCO to in­vest in the coun­try.

In­dia, the world’s third largest steel con­sumer, has bud­geted a record US$59 bil­lion (RM 262.4 bil­lion) for steel-in­ten­sive in­fra­struc­ture projects, such as ports, roads, rail­ways and power.

“The pref­er­ence in pro­cure­ment will en­hance de­mand, and thus pro­duc­tion,” said Steel Minister Chaud­hary Biren­der Singh.

“It is pref­er­ence with no com­pro­mise on qual­ity and com­pet­i­tive pric­ing. To use do­mes­tic pro­duce is an ac­cept­able norm.”

An­a­lysts said a sim­i­lar pro­posal by United States Pres­i­dent Don­ald Trump re­quir­ing the use of do­mes­tic steel to build two en­ergy pipe­line projects could vi­o­late in­ter­na­tional trade laws, but In­dian of­fi­cials say their plan will fall within WTO rules.

A gov­ern­ment doc­u­ment on the pro­posal cites an ar­ti­cle un­der the Gen­eral Agree­ment on Tar­iffs and Trade of the WTO, al­low­ing an ex­cep­tion to “pro­cure­ment by gov­ern­men­tal agen­cies of prod­ucts pur­chased for gov­ern­men­tal pur­poses and not with a view to com­mer­cial re­sale or with a view to use in the pro­duc­tion of goods for com­mer­cial sale”.

BLOOMBERG PIC

Work­ers at the con­struc­tion site of the Bhendi Bazaar re­de­vel­op­ment project in Mum­bai, In­dia. The coun­try has bud­geted US$59 bil­lion for in­fra­struc­ture projects.

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