“The introduction of the Minimum Import Price on steel products will raise the cost of raw materials for engineering products by about 6-10 per cent depending upon the nature of product. This will have a serious debilitating impact on engineering exports which have already declined by a huge 15 per cent in the first nine months of the current fiscal,” Chairman of EEPC India, T S Bhasin said in a statement.
Segments like auto and auto parts, industrial and electrical machinery, products of MSME sector, which in any case have low margins and are facing cut throat competition will face sudden escalation in raw material price, hitting hard engineering exporters.
Moreover, the move will have an inflationary impact on the entire manufacturing sector and leakages of money as all import invoices will be at MIP now.
“The Government must provide steel at global competitive prices and EEPC India requests the Government to provide a compensatory mechanism for higher steel prices that the MIP entails on domestic prices,” he said.
A new International Price Reimbursement Scheme (IPRS) should be immediately introduced, he said.
Bhasin said the safeguard duties should be removed and not extended further as the MIP has already been fixed. It may be mentioned that the Advance Authorisation route is not used by the MSME sector and has many limitations.
Hence unless a price reimbursement mechanism is worked out for engineering exporters, there will be no revival of exports in the next six months, the EEPC chief cautioned.