'China must ease cap on Indian steel exports'

The recent Chinese move to limit steel exports by Indian firms to 3 per cent of its total imports for the current year has stirred a hornet's nest in the Indian steel industry.

Tata Steel managing director B Muthuraman declared in Bangalore on Wednesday that China should lift the cap so that its importers could benefit from the competitive price of Indian steel products.

"The limit is not WTO compliant. Fixing such a small quota on a country of India's size needs to be debated. It is not in conformity with the free trade policy under the World Trade Organisation regime. The Indian government needs to sort out the issue with its Chinese counterpart," Muthuraman told the media.

Admitting that Indian steel exporters had already exceeded the 3 per cent annual limit during the first 4 months of the current fiscal year (2003-04), Muthuraman said the industry had represented its case to the government for an early solution.

"Though there will be no impact on Tata Steel exports as such, the 3 per cent limit is not rational. In the first 4 months, Indian firms exceeded the limit by exporting 4.5 per cent of China's total steel imports," Muthuraman stated.

Exports constitute 15 per cent of the company's total turnover.

Incidentally, Tata Steel is one of the largest exporters to China. During the first 6 months of this calendar year, its exports to China shot up by 137 per cent over the corresponding period of last year.

In the first four months of the current fiscal (2003-04), the company exported 45,728 tonnes of special steel and cold rolled products valued at $621 million.

In view of the pent-up demand for steel in China due to massive infrastructure build-up in the run-up to the Olympics 2008, Indian exporters have been aggressive to capitalise on the quality and price advantage their products command over exports from Japan, Korea or Europe.

"China should have a fresh look at its quota regime for countries like India, which is not only one of the low-cost steel producers, but is also nearest to its ports," Muthuraman asserted.