Essar Steel is planning to reduce its exports to China as it sees the domestic market, especially for flat products, looking more profitable for the company. This move is also in keeping with a directive sent by the The Indian government has asked Indian exporters to exercise restraint while exporting to China on account of the fact that Indian exports to China have already crossed the permissible three per cent mark.

According to company sources, Essar Steel exports roughly about 10-15 per cent of their production to China and the company sees that this move will only benefit its sales in the domestic market. According to industry observers, all the Indian steel manufacturers are cutting down their exports to China.

Industry sources said that reportedly Indian steel exports to China had crossed the three per cent mark and was closer to six per cent now. As per WTO guidelines, a developing country can export up to three per cent of the total imports of the importing country after which it can initiate trade action.

Even though China has not initiated any action against India, the Chinese government has expressed concern over surging Indian exports to China. In line with the Indian government's directive to exercise restraint while exporting to China, industry sources said Indian exporters were as of now contemplating slowing down their exports.

When contacted, Essar Steel officials confirmed the development, saying, "We have to abide by the advisory received."

Meanwhile, a delegation led by steel secretary along with Indian steel exporters will be visiting China in a few weeks time to try and impress on Chinese government that Indian exports are not affecting the Chinese steel industry.

Essar Steel's total exports to China for the period April '02 to March 2003 was 81,000 tonne, of which 52,000 tonne (65 per cent) was value added grades.