In a significant move to protect its domestic steel industry, India has announced a temporary 12% safeguard duty on certain steel imports. This decision aims to counter the surge of inexpensive steel, particularly from China, which has been impacting local manufacturers.
Background and Rationale
India, the world's second-largest crude steel producer, has been grappling with a flood of low-cost steel imports. In the fiscal year 2024/25, the country became a net importer of finished steel for the second consecutive year, with imports reaching a nine-year high of 9.5 million metric tons. Approximately 78% of these imports originated from China, South Korea, and Japan. The influx of cheap steel has pressured domestic producers, especially small and medium-sized enterprises, leading to operational challenges and potential job losses.
The Directorate General of Trade Remedies (DGTR) conducted an investigation into the matter and recommended the imposition of a safeguard duty to protect the domestic industry from serious injury caused by the surge in imports. Acting on this recommendation, the Indian government has decided to implement a 12% tariff on specific steel products for a duration of 200 days.
Industry Support and Implications
Major players in the Indian steel industry, including JSW Steel, Tata Steel, the Steel Authority of India (SAIL), and ArcelorMittal Nippon Steel India, have expressed support for the government's decision. They believe that the tariff will provide much-needed relief to domestic producers and help restore fair competition in the market.
Steel Minister H. D. Kumaraswamy stated, "The safeguard duty is a necessary step to ensure the sustainability of our steel industry. It will help mitigate the adverse effects of cheap imports and support the growth of domestic manufacturers."
The temporary tariff is expected to stabilize the domestic steel market, prevent further job losses, and encourage investment in the sector. However, it may also lead to increased costs for downstream industries that rely on imported steel, such as construction and automotive manufacturing.
Global Context and Future Outlook
India's move aligns with a broader global trend of countries implementing protective measures to shield their industries from unfair trade practices. The United States, for instance, has imposed tariffs on steel imports from several countries, including China, to address similar concerns.
While the 12% safeguard duty is a temporary measure, its impact on the domestic steel industry will be closely monitored. The government may consider extending or modifying the tariff based on the evolving market dynamics and the effectiveness of the current measure in curbing the influx of cheap imports.
In the long term, India aims to strengthen its steel industry by promoting self-reliance, enhancing production capacities, and ensuring fair trade practices. The current tariff serves as a strategic step towards achieving these objectives and securing the future of the domestic steel sector.