India's leading steelmakers are seeking an extension of the minimum import price (MIP) imposed on steel by six months to a year.

Producers including JSW Steel, Tata Steel, Essar Steel and the Steel Authority of India are also concerned that letters of credit (L/Cs) arranged before the MIP was imposed made the measure, which was meant to keep cheap steel imports out of India, less than effective.

Protective measure

The current MIP order is due to end this month and is a tough protective trade measure that sets a price below which steel imports are not allowed into the country.

The measure was introduced in February and ends in August, so the industry is anxiously awaiting a government decision as it fears in the absence of the MIP, local companies will have to face the prospect of cheap imports once again.

L/C timings

Indian producers are also concerned that between February and June more than half of India's steel imports were priced below MIP because so many L/Cs were opened prior to the measure becoming effective.

The Indian steelmakers say this led to the initial MIP period proving less effective in terms of deterring steel imports than they had anticipated.

They are calling for an additional six months of MIP, which they argue would be more effective because there would not be the quantity of L/Cs opened prior to its imposition as there was during the initial period.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.