Misdeclared Rebar import made its way into the Indian market.
To know the matter of rise in Chinese Rebar import in Indian market, we interviewed Mr Vipin S Agarwal, MD, Shree Vaishnav Group of Companies. Here are the excerpts.
Q. How are we so sure that the reinforcement steel bars are getting imported as Alloy Steel?
A. The quality certificate has classified this product as BS4449 which is a British Standard for construction grade non-alloy steel bars. Only in India, there is a misrepresentation that any steel can be classified as Alloy Steel provided that it has Boron to an extent of 0.0008%, which is so minuscule to distinguish that it can be there in any form of steel and cannot be held as a criteria for such big classification purposes under Customs & Excise norms. Taking advantage of this, the manufacturers have intentionally specified Boron at about 0.0010% trying to meet the norms of Alloy Steel Bars and thereby completely avoiding the Quality Control order of BIS.
Q. Also, how are we sure that such bars are being used in construction activities?
The distinctive patterns mentioned in the Test Certificate of the Chinese Mills and their Sales Contract clearly specify Rib patterns on the bars, which means that it cannot be used in the Engineering Industry (pertaining to Alloy Bars which are non-ribbed in nature) and being wrongly classified under Excise Chapter 7228.3019 as ‘Other Alloys Bars in Straight form’.
Since the bars are ribbed during the rolling process, there is no mention of any ribs, grooves or indentations in any Excise or Customs chapters; except for Excise Chapter 7214 20 under which the customs officials needs to charge import duty. Please note that only Excise sub-chapter 7214 20 clearly states ‘Containing indentations, ribs, grooves or other deformations produced during the rolling process or twisted after rolling.’
Q. Reinforcement Steels Bars in India are governed by BIS norms, is that true?
Yes, according to the new guidelines of Quality Control Order (2nd Amendment), all manufacturers, foreign or domestic, cannot manufacture, import, store for sale or distribute reinforcement steel bars used in construction activities which do not conform to IS 1786 standards and which do not bear the standard ISI Mark. BIS Authorities have the right to seize such spurious reinforcement steel bars, which are of inferior quality and cause severe stress and damages to high rise towers and also weaken the foundations of such buildings putting human life at stake.
Q. How are the Chinese manufacturers able to offer TMT bars at a much cheaper price than the prices prevailing in Indian markets?
By wrongly classifying the Reinforcement steel bars as Alloy Steel Bars, the importer or the Chinese manufacturers are able to avoid the Quality Control Order enforced upon Excise Chapter 7214 for verification of ISI Mark before accepting the Challans for import duties under that head.
Secondly, by falsely classifying reinforced steel as Alloy Steel, there is an Incentive of 13% (Export Tax Subsidy) from Chinese Government which is almost USD 65 (Approx INR 4,000/MT) for a USD 500 consignment for export of engineering goods from China.
Q. What steps have been taken since it was reported to customs & the government?
A. Our Steel Re-Rollers Association of Maharashtra (SRAM) has written letters to Zonal Jt DGFT (Mumbai) Head of Enforcement (BIS), Chief Vigilance Officer (Dept of Consumer Affairs), Jt Secy (Ministry of Steel) and various other delegates. SRAM had arranged a press conference in Mumbai and have tried to create awareness, but we are yet to see any actions being taken by the government in this matter so far.
Q. Are they dumping material by their will or do we have specific buyers here in India?
A. Currently, the Chinese economy has matured and the local infrastructure demand is not very high. They have spare capacity in their mills and hence, they have started aggressively dumping steel by wrongly classifying it as Alloy Steel and dodging the customs officials with the Quality Control Order in place and gaining Export Tax Subsidy as well. Similarly, here in India, many shipbreakers & traders have Import LCs lying idle. These have booked certain cargoes which is due to arrive in August-end & September. Most of the bars are being imported in Gujarat as there are many private ports which handle Break bulk cargo to a large extent. This has led to the biggest fall in demand in TMT in the state of Gujarat.
In addition, Barges (small vessels) carrying Iron ore in Break bulk to China, are returning with Steel bars thereby saving on freight as well. This is a dreaded situation wherein we’re exporting country’s natural resources and returning with steel at a subsidized cost and wrongly classifying it under a suspicious Excise & Customs Chapter which doesn’t even confer to Indian Standards.
Q. How much trade must’ve occurred?
A. As mentioned earlier, there must’ve been about 0.1-0.2 MnT of Chinese TMT order being booked at a rate of around INR 31000 to INR 34000/MT considering 180 days of LC. This is highly unfortunate that we in India usually buy ‘Billets’ not ‘Finished Steel’ at such rates. Yes, we are competitive manufacturers, but can give best quality steel at a very good price provided we are facing healthy competition and have a level ground playing field. One really cannot compete with 13% Tax Rebate coupled with abatement of Stringent norms of BIS and having consumers duped by selling inferior Steel which is not certified and approved as per BIS mandate, can we?