The trade war has thrown a serious challenge to the Indian economy as it has become the most favoured dumping ground for steel makers from Asian manufacturing powerhouses. China along with Japan and South Korea has started to divert their steel exports to Indian amid the global tariff war triggered by the Donald Trump administration.
The steel imports from the world's largest steel producer soared 67 percent to 3,62,000 tonnes in the April-June period as against 2,17,000 tonnes in the previous quarter. This has come in contrast with the crash in the overall merchandise imports from China.
On the similar lines, imports from South Korea and Japan have also flooded the Indian Market, with a surge of 35 percent and 47 percent to 7,46,000 tonnes 3,74,000 tonnes, respectively, in the June quarter, as against last quarter.
Japan and Korea have signed a free trade agreement with India and their imports enjoy duty relief. The oversupply of the steels from these countries has impacted the prices of domestic steel so much that the imported steel are available at a price 10 percent lower in comparison to the steel produced in India.
There is a direct relation between the drop in the exports to the US from China, Japan and Korea vis-à-vis surge in the export to India. The combined steel imports to the US from these three countries tanked by 17 percent, or 2,41,000 tonnes, in the June quarter as against the previous quarter whereas their exports to India soared by 4,59,000 tonnes, up by 45 percent from the March quarter.
This has come against the US safeguarding its economy from the cheaper steel imports from these countries. These countries not only are diverting their US exports to India but also the exports which were destined to the European countries.
There is a threat to India to become the net importer of the steel in the current financial year after it was a net exporter of steel for two consecutive financial years, supported by the government policies.
The Trump administration has forced these countries to chalk out a new plan when it slapped an additional 25 percent duty on steel.
