India Recommends 12% Import Duty on Steel Products

New Delhi, Mar 19 (PTI) The commerce ministry's investigation arm DGTR has recommended the imposition of a 12 per cent provisional safeguard duty for 200 days on certain steel products with an aim to protect domestic players from a surge in imports.

Last year in December, the Directorate General of Trade Remedies (DGTR) started the investigation into the sudden surge in imports of 'Non-Alloy and Alloy Steel Flat Products', used in various industries, including fabrication, pipe making, construction, capital goods, auto, tractors, bicycles, and electrical panels.

The investigations were conducted following a complaint from the Indian Steel Association on behalf of its members including ArcelorMittal Nippon Steel India; AMNS Khopoli; JSW Steel; JSW Steel Coated Products; Bhushan Power & Steel; Jindal Steel and Power; and Steel Authority of India Limited.

The directorate in its probe has preliminarily found that there is a recent, sudden, sharp and significant increase in the imports of these products into India, causing and threatening to cause serious injury to the domestic industry/producers.

The directorate has said in a notification dated March 18 that there exist critical circumstances, where any delay in application of provisional safeguard measures would cause damage which would be difficult to repair.

There is a necessity for immediate application of provisional safeguard measures.

"The authority recommends imposition of provisional Safeguard Duty at the rate of 12 per cent ad valorem for 200 days pending final determination on imports of the product under consideration," the DGTR has said in a notification.

The finance ministry will take the final decision to impose the duty.

According to the industry, the existence of significant excess capacity far exceeding domestic consumption in China, Japan and South Korea has arisen due to slowing demand in those countries.

Import of these products increased from 2.293 million tonnes during 2021-22 to 6.612 million tonnes during the period of investigation (October 2023 to September 2024, and the three preceding fiscal years - 2021-24).

The imports have increased from countries including China, Japan, Korea, and Vietnam.

The notification added that the objective of the duty is to protect the Indian domestic industry against the surge of imports.

While some big domestic steel makers are advocating for the imposition of the duty, the user industry is strongly against it as the duty would push raw material prices, impacting their competitiveness.

Domestic steel players have raised concerns over increasing imports of steel from nations like China.

However, MSME exporters from the engineering sector have stated that any move to impose additional duties on steel imports would make domestic products uncompetitive and impact the country's outbound shipments from the sector.

Hand Tool Association Chairman S C Ralhan said that the imposition of the duty would hurt exports from India.

"It will be very damaging for MSME exporters and manufacturers as the duty will increase prices of steel which is a key raw material for our industry. It will make exporters uncompetitive in global markets," Ralhan said.

Safeguard measures in the form of duty or quantitative restrictions are trade remedies available to the World Trade Organization member countries.

They are imposed to provide a level-playing field to domestic players in case of sudden and significant increase in imports of a product.

The measure is used when imports of a particular product increase unexpectedly to a point that they cause or threaten to cause serious injury to domestic producers.

These duties are applicable against all the countries with uniform rate of duty unlike the anti-dumping duties.

Economic think tank GTRI said that the proposed duty would raise steel prices, adversely affecting downstream industries such as automotive, infrastructure, and renewable energy.

"Specialized steel requirements remain unmet domestically due to technological and quality limitations, making imports essential. An estimated 10 per cent increase in steel demand in 2025 contradicts claims that the industry is in distress and requires protectionist measures," GTRI Founder Ajay Srivastava said.

The duty contradicts India's "Make in India" initiative by raising costs for local manufacturers dependent on imported raw materials, he said adding the measure could encourage monopolistic practices, as sole domestic suppliers may restrict consumer choices and inflate prices.

"The safeguard order has notable weaknesses and strong opposition. Procedural and legal violations have been pointed out, as the investigation was initiated within six days of receiving the petition, violating Rule 5(3) of India's Safeguard Rules, which requires a thorough review before launching an inquiry," Srivastava said.