Proposed steel duty to impact CE sector MSMEs: JCB CEO

CHENNAI: The proposed 12% safeguard duty on imports of non-alloy and alloy steel flat products by the Directorate General of Trade Remedies will pinch MSME players in the construction equipment industry with the spot market prices of steel going up by Rs 4 to Rs 5 a kg, said Deepak Shetty, CEO JCB: “From the domestic market point of view the cost of the product will go up but it will hit the smaller players more because many of them source steel from the spot market.”
The price pinch because of the duty, he added, would also affect exports at a time when the US tariffs are already making things ambiguous.
“JCB is exporting to more than 130 countries and when competing in the global market if you start losing cost advantage, it’s a challenge,” he said. That’s because Indian exports were already “reeling under the challenge of complete blockage of shipment through Red Sea so shipments had to go through the Cape of Good Hope. Now, on top of that, the steel price going up.” The Red Sea crisis, he said, has increased logistics costs by 15% and shipment time by around two weeks

Already the construction equipment industry through the apex body Indian Construction Equipment Manufacturers’ Association (ICEMA) has requested the govt to “keep a very close eye” to prevent spot market profiteering. The construction equipment industry in general and JCB in particular have ramped up exports in the last couple of years and recent move to Stage 5 emission norms means Indian companies “can sell to major markets in Europe. It’s a great opportunity for Indian companies particularly as we are moving up the value chain from emission point of view to to leverage our cost base. India is the third largest market today and all major machines that people need for building infrastructure are produced in India.” JCB, he added, is has increased capacity by 35% to 40% in the last five years because we “believe that in next five years the Indian construction equipment market, which is number 3 in the world, will become number 2 and we’re not only catering to the Indian market but to the global market too,” he said.