A decision by the Indian government to increase import duties on certain steel products is expected to adversely affect the operations of the Taiwan-based China Steel Corp's plant in India, Taiwan's Ministry of Economic Affairs said Saturday.

The company's production base in the western state of Gujarat is expected suffer higher operating costs as imported steel products will become more expensive after the tariff hike, the ministry said.

Effective Aug. 12, India's import duties on steel bars and certain hot-rolled steel plates were increased 2.5 percentage points to 12.5% and 10%, respectively, the minstry said.

It was the country's second tariff hike on steel products since mid-June, as it has been trying to protect its steel industry by preventing foreign exporters from undercutting local businesses, the ministry said.

In addition to the tariff hikes on steel bars and hot-rolled steel plates, the Indian government has raised import duties 2.5 percentage points on a wide range of metal products such as copper, nickel, lead, zinc, aluminum and tin.

China Steel's plant in Gujarat launched commercial production on Jan. 12, featuring an annealing and coating line, and is aiming to roll out an annual 200,000 tonnes of electrical steel, a type of value added cold-rolled steel.

Described as the first stage of China Steel's investment in India, the project was launched in July 2012 and construction started in August 2013, with an investment of US$237 million.

The ministry said other Taiwanese steel exporters in India are also expected to feel the pinch of India's higher tariffs, which will erode their competitive edge.

In 2014, Taiwan sold US$176.08 million worth of steel products to India, a 1.43% annual drop, while its market share fell to 1.54% from 1.73% the previous year.

The ministry said it will continue to voice its concerns to the the Indian government about the higher import duties and will push for a bilateral free trade agreement to eliminate such trade barriers.

Currently, China, South Korea and Japan are three largest steel exporters to India, with a combined 46.77% share of the market. Since South Korea and Japan have comprehensive trade agreements with India, they will not be affected by the tariff hikes, the ministry said.

Source:wantchinatimes.com