Arjun Yadav's Webpage

China is throwing a steel party!

2023-08-31

"What is this guys! What is this! Is this how we are gonna be a $5 trillion economy?" That's what MS Dhoni would have said if he were to be the GDP Captain of India. But clearly he is not so I had to say it. And why shouldn't I? No it's not because I am the GDP captain of India, but I have acquired this right merely because I own this website. I can write whatever I want to. And that's why you should too get yourself a domain. But no let's just stop. I should stop shilling this web 1.0 utopia. Coming back to the topic, what made me question such a thing? and to whom? Well the organization in question is Indian Steel Association (ISA) and I am not the only one who has bad blood on them right now. Any sensible man who has read yesterday's Business Standard can understand this. Let me share with you the news:

There are few things which we must know to understand the current condition:

Now I am not highly certified economist, but as most of the people, I have taken some basic classes on economics. Both in school and in college. You might agree with me here that we were always taught that cross country trade is beneficial for the development because through that we can utilize the benefit of specialization and we might also be able to get stuff at cheap prices.

And that is clearly happening. We (Indian importers) are getting stuff (Steel) at cheap prices. Now steel is an important ingredient in many industries like real estate, automotive, defence manufacture, transportation, construction equipment and so on. In conclusion we can say steel is an integral ingredient to build India. Getting steel at cheap prices is sure to decrease the cost and finally the prices of the products. It's a win-win-win situation for both the sellers (Chinese) and buyers (Indian manufacturers) and buyer's buyer's (we the consumers of India).

It is understandable that ISA is upset. Steel is their bread and butter. Come on! no one will be happy to see someone taking their customers away. It's difficult to build a market for your product. And when someone takes your customers away by selling at cheap price, it is indeed painful.

But we can't just look at ISA in vacuum and say if cheap steel is hurting the interest of ISA it's also going against the interest of India too. Because there are three parties from India which are affected by all this:

Silent majority is happy. But this vocal minority of ISA is trying to force the government to make India a more restricted country for trade. Just read the statement made by someone from some steel company in India:

"First, the Chinese mills are gaining foothold in our traditional export markets, and second, they are pushing products into the Indian market at lower prices. In response to this situation, the government should promptly consider implementing quotas for countries with free trade agreements and imposing anti-dumping duties on imports from countries without FTA's."

If government takes any measure to dis-incentivize steel imports from china by the request of ISA, it will mark one more instance where it is clear how elite shapes the rules of game in India. I hope it does not happen. One thing is clear that this cheap steel is only for short run, once domestic demand for steel in China reemerges, this short term steel party in India will be dead again. Until then, ISA please let us enjoy cheap steel. CPI was already taking toll of average Indian. We weren't able to buy tomatoes please at least let us buy steel for cheap.