Context
The Directorate General of Trade Remedies (DGTR) has suggested the imposition of a 12% safeguard duty on steel products for a period of 200 days. This is an attempt to support the domestic steel industry which suffered an incidence of “serious injury” due to sudden invasion of steel products. In the meantime, the recommendation will be placed for consideration before the Department of Revenue under the Ministry of Finance.
Background: Steel Import Surge and Global Trade Diversion
- The importing activities of finished steel from China, South Korea, Vietnam, and Japan have alarmed Indian authorities.
- A surge was triggered by trade diversion after the U.S. implemented a 25% tariff on steel and aluminum (effective March 12) on the latter.
- Since 2018, global steel trade patterns have changed with the EU, South Africa, Turkey, Vietnam, and Malaysia taking measures to guard their own markets.
DGTR Recommendation and Its Urgency
- The DGTR report states that immediate action is warranted to prevent any irreparable damage to the domestic steel industry.
- Key statement: “There is a necessity for immediate application of provisional safeguard measures.”
- With the recommendation, it intends to counter trade diversion and prevent the deluge of surplus steel from other markets being guzzled by India.
Economic Implications
- The safeguard duty could raise raw material costs for MSMEs and steel dependent industries at a time when global steel prices are expected to soften.
- However, it already has raised metal stocks on the National Stock Exchange (NSE)
- The Nifty Metal Index increased by 1.67%, closing at 9,185.20.
- Hindustan Zinc stocks were up by 9.48% in intraday trading.
Summary of Recent Restrictive Measures (Source: DGTR)
| Product Category | Action Taken |
|---|---|
| Non-alloy & alloy steel flat products | Preliminary findings (March 2025) recommend a 12% safeguard duty for 200 days. |
| Low-ash metallurgical coke | Quantitative restrictions imposed from January 1 – June 30, 2025. |
| Ferromolybdenum | Two-year safeguard duty announced in May 2023. Imports from South Korea faced a 5% duty (Oct 2023 – Oct 2024), followed by a 3.75% duty for the next year. |
Balancing Industry Protection and Economic Costs
- The final decision rests with the Department of Revenue, with stakeholders closely watching for potential impacts on raw material costs and India’s trade competitiveness.
- The 12% safeguard duty aims to protect India’s steel manufacturing sector against global trade distortions.
- However, higher input costs could strain MSMEs and related sectors.
