DAVOS – India’s Tata Steel is concerned that a sudden decision to impose an export tax on some New Delhi steel products could force it to review its production targets if its tariffs remain in place for a long time, its chief executive told Reuters on Tuesday.
India has imposed a 15% export tax on some steel products over the weekend, as steelmakers seek to meet local demand by increasing their market share in Europe, where Ukraine’s conflict has hit supply.
These taxes were part of a series of measures taken to curb India’s retail inflation, which has reached an eight-year high. But India’s top steelmaker warned that the new tariffs would “adversely affect” mills aimed at boosting exports and expanding global market share.
TV Narendran, chief executive of India’s largest steelmaker by revenue, said that given Tata Steel’s realization of inflationary concerns, such measures could hurt the steel industry in the long run.
Tata Steel plans to double its capacity in India from 20 million tonnes (mtpa) to 40mtpa per year, but Narendran says it has baked an estimate of 10-15% of its exports.
“If there is a long-term directive that steel exports should be discouraged, we need to make a call – then you will only build as much capacity as possible for the domestic market,” Narendra told Reuters in an interview. At the World Economic Forum at the Swiss Alpine Resort in Davos.
“We need to have 40 million or 35 million, we will decide … in the medium to long term, India should encourage exports,” he added.
As part of the industry delegation, Tata Steel will hold talks with the government to “find a common ground” that will address industry concerns in New Delhi as well, Narendran added.
Tata Steel also has operations in Europe, where it claims to be one of the largest steel producers since it bought the Anglo-Dutch Chorus Group in 2007 for 2 6.2 billion, but Narendran said India is its best-performing business in terms of profitability.
“Our growth ambitions will be best met in India.” (Reporting by Aditya Kalra in Davos; Additional reporting by Neha Aurora; Editing by Alexander Smith)