The Board of Safeguards has upheld the recommendation of the Directorate General of Safeguards (DGS) for imposition of a 20 per cent safeguards duty on certain steel products to protect interests of the domestic industry, say sources.
Last week, DGS had recommended a “provisional safeguard duty at the rate of 20 per cent ad valorem for 200 days, which is considered to be the minimum required to protect the interest of the domestic industry”.
The Board of Safeguards has approved the recommendations of the DG Safeguards, sources said.
Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain timeframe to avert any damage to a country’s domestic industry from cheap imports.
After the recommendation of the board, the Finance Ministry will issue a notification announcing the duty hike.
DGS examined the application from major steel producers — SAIL, Essar Steel and JSW Steel — and found that “prima-facie increased imports of (certain kinds of steel) have caused or are threatening to cause serious injury to the domestic producers…”
The domestic steel producers had complained of a surge in imports of steel products like hot-rolled steel and other variants from China, Korea, Japan and Russia.
The three players, representing 50 per cent of the domestic production, had moved DGS, for imposition of the levy on imports of hot-rolled flat products of non-alloy and other alloy steel in coils of width of 600 mm or more for four years.
The domestic industry, DGS said, has requested imposition of provisional safeguard duty in view of a steep deterioration in the performance of this industry in view of the import surge.
According to DGS, the market share of domestic producers has been declining since 2013-14 and is likely to fall from 45 per cent to 37 per cent in 2015-16.
The steel producers are seeking the safeguard duty as it would also cover imports from countries like Japan and South Korea, with which India has free trade pacts.
Last month, the government had hiked import duty on base metals, including iron and steel, by 2.5 per cent in a move aimed at helping domestic players battling cheap Chinese imports after the currency devaluation by China.
The safeguard duty is imposed by the revenue department on the recommendations of DGS.
The imports increased to 33,79,360 tonnes in 2015-16 (annualised), from 12,92,099 tonnes in 2013-14. The percentage of import with respect to domestic production rose to 13 per cent, from 5 per cent during the period.
In June, India imposed anti-dumping duty of up to $316 per tonne on imports of certain steel products from three countries, including China, to protect domestic producers from below-cost in-bound shipments.