New Delhi, The imposition of countervailing duty on 'stainless steel flat' products imported from Indonesia should improve domestic sales realisation along with the profitability of sector based companies, expects Ratings and Research (Ind-Ra).

The countervailing duty (CVD) of 21-23 per cent on the stainless steel (SS) flat products imported from Indonesia was imposed from August.

As per an Ind-Ra note, India's flat SS producers were adversely affected during FY19-FY20 by margin pressures due to a supply glut caused by the imports from Indonesia.

"SS margins have been affected by a continuous increase in SS supply from Indonesia to India over FY19-FY20 at subsidised prices offsetting the reduction in cheap imports from China and South post imposition of anti-dumping duty measures in FY16," the note said.

In FY20, SS imports from Indonesia rose to 280,600MT, resulting in India's total SS imports increasing to 742,000MT.

Just Indonesia's SS imports to India in FY20 contributed nearly 38 per cent to India's total SS imports in volume terms.

"Indian SS Producers have been trying to boost their exports mix of sales so as to offset domestic price declines," the note read.

Besides, Ind-Ra expects SS players engaged in the manufacturing of long and flat 'patta' products to also witness some margin benefit.

"Indonesia imports contributed about 15 per cent to India's flat rolled products consumption over 2019," it cited.

In addition, Ind-Ra expects the same to reduce to 5-7 per cent in 2021.

"The supply gap due to lower imports could be met through higher production of flat products as well as a shift in their exports sales volumes to domestic markets to benefit from healthy domestic prices and margins."