Mumbai - Automobile Component Manufacturers Association (ACMA) has made representation to the ministry of steel and ministry of heavy industries, asking for the removal of the 5 per cent import duty on steel alloy, so that the domestic suppliers of these auto-grade steel, would start benchmarking their own price at a lower level.
Though Indian component makers do not import steel alloy now, they have to pay the price, as domestic suppliers benchmark their price on landed cost of the alloy. Since August 2007, prices of various types of steel alloys have seen a sharp rise. Industry sources said that another round of increase is expected in June, which will see a price revision of Rs 3,500-4,000 a tonne.
Earlier last month, the price of non-alloy steel was revised to make it zero duty item. However, it was done only for retail consumption, which primarily go into housing.
ACMA is asking for this treatment across all grades of steel, including alloy and non-alloy steel.
Rough estimates indicate that the Indian automobile sector uses nearly 7 lakh tonnes of steel (cold-rolled and alloy) a year. ACMA estimates that nearly half of this is used by auto component suppliers, which is primarily alloy steel like carbonated steel, chrome steel and chrome-moly steel.
ACMA also contends that since automobile manufacturers expect parts' supplies in India, to benchmark the price with Chinese products, the domestic steel price in India must also match that of Chinese prices. "We would be able to compete with China (in the Indian markets) only if our inputs costs also match theirs," said Vishnu Mathur, executive director, ACMA. Carbonated and chrome steel from China would approximately be equal to Rs 40,000 a tonne if imported.
The domestic price of these two items are around Rs 3,000-5,750 a tonne higher in India.
He added that apart from rising steel prices, the industry has to deal with imports from China too. "In some specific product categories, our imports is completely from China like steering systems and wheel rims," he added.
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