The impact of the slowdown in the automotive industry on the Indian steel industry
Steel is one of the main raw materials for the automotive industry. India is the world's second-largest steel producer with domestic steel resources for the automotive industry. However, there is still a gap in high-end steel supply, and most of the high value-added steel required by the country still needs to rely on imports before India succeeds in raising high-end steel production capacity by investing in international steel producers or joint ventures.
The most worrying thing at the moment is that the auto industry is facing the dilemma of being forced to shut down some of its production capacity due to a sharp drop in global and Indian demand for automobiles.
According to the WorldSteel Association, about 900 kilograms of steel is used in an ordinary car, 34% of which is used for the body structure and 23% for the engine block and gearbox gear assembly.
Some people think that India needs to impose a protective tariff on imported steel. A basic principle for imposing anti-dumping duties, safeguards duties or other import duties is that any import duties must be levied to encourage imports that are not manufactured in India, meet the stringent demand for downstream steel, or have insufficient domestic production in India. Steel products are premised on the premise that there is no additional cost to the import of such products, as any tariff imposed on the above-mentioned steels will increase the additional costs downstream, making the final consumer's goods more expensive.
At present, the automobile industry is in a downturn. If additional high-quality steel tariffs are imposed on high-end steel products, the procurement cost of raw materials will be increased, and the automobile manufacturing industry and pipe producers will be collectively in trouble.
The use of Indian-made steel pipes in natural gas pipelines and oil-producing pipelines has certainly promoted the advancement and implementation of the “Made in India” program. However, if it is still necessary to import some reasonably priced raw materials to meet domestic demand, then adding additional tariffs at this link will increase the procurement costs of downstream enterprises and ultimately increase the cost of use for end users.