April 10, 2012 / 3:39 PM / 7 years ago

Exclusive: India to challenge U.S. duty on steel pipes: source

NEW DELHI (Reuters) - India is preparing to challenge a U.S. import duty on steel pipes by requesting “consultations” at the World Trade Organization, a senior trade ministry official said, in the latest in a series of recent disputes between the two allies.

The United States Commerce Department in March set a preliminary import duty of nearly 286 percent on a certain type of steel pipe from India to offset government subsidies. A final decision on duty rates is expected by August.

The Indian government will challenge the allegation that the manufacture of the pipes is indeed being subsidized, the official, who declined to be named given the sensitive nature of the matter, told Reuters on Tuesday.

“They are in absolute and total breach of the WTO. There is no subsidy involved,” the official said.

The U.S. embassy in New Delhi was unable to provide an immediate comment.

Commercial ties between India and the United States flourished after India’s economic liberalization in 1991, but in recent years each side has accused the other of erecting unfair barriers to trade and investment growth.

India is also requesting consultations - the last step to resolve a disagreement before entering a full-fledged legal dispute - over the cost of U.S. work visas and over a recent spike in Indian visa applications being turned down.

The official said Washington has imposed the duty on the Indian pipes because a portion of the iron ore used to produce them is provided by state-run miner NMDC (NMDC.NS), the country’s largest.

Washington has imposed a duty on the premise that “because NMDC is a public sector undertaking, it is selling this iron ore ... for a song, and therefore implicitly subsidizing a private-sector enterprise. This is the allegation,” the Indian official said.

The allegation is baseless as NMDC is one of many producers of iron ore in the country, the official said.

“And prices of iron ore are domestically market-determined, because NMDC is one PSU (public sector undertaking) and most mining of iron ore is in the private sector. So where is the question of a subsidy being paid? There is no subsidy.”

Reporting by Matthias Williams; additional reporting by Frank Jack Daniel; editing by Malini Menon

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