In an important policy decision to support the domestic steel industry from the rapid influx of low-cost imports, primarily from countries like China and rising global headwinds, the Government of India has announced a 12 per cent provisional safeguard duty on specific segments of flat steel products. The move announced in a notification by the Finance Ministry on April 21 and effective for 200 days as of now, is likely to offer temporary relief to Indian steelmakers including smaller players.
The decision applies to a range of non-alloy and alloy flat steel products such as hot rolled coils, cold rolled sheets, metallic coated products, and colour-coated steel falling under tariff codes 7208 to 7226.
Importantly, the move follows the findings by the Directorate General of Trade Remedies (DGTR) last month on the impact of imports of non-alloy and alloy flat steel products. The report noted that a recent, sudden, sharp and significant increase in imports is causing serious injury and threat of serious injury to the domestic industry.
India’s steel imports, according to the government data, have grown significantly. From 3.329 million tonnes (mt) in the first half of FY24, the imports jumped by 41 per cent to 4.735 mt in the first half of FY25. In the entire fiscal, the imports increased to 9.25 mt, the highest since FY16, while exports plummeted to a decade low of 5 mt. India was the net importer of steel with finished steel exports at 4.9 mt.
Even as the total volume of steel imports, relative to national consumption, remains modest, the influx of cheaper imports results in downward pressure on domestic steel prices, impacting steel producers of all sizes.
However, out of the 144.30 Million Tonnes of steel produced in India in FY24, 58.93 Million Tonnes (40 per cent) was produced by over 1,002 small producers and 85.37 Million Tonnes (59 per cent) was produced by the integrated steel producers, according to the government data. Hence, it is apparent that a substantial share of steel production in India comes from small producers located in numerous clusters who are equally affected by low steel prices.
With Indian steelmakers tackling reduced margins because of global price suppression, underutilisation of capacity, and the influx of dumped exports by countries such as China and Vietnam, the safeguard duty at this point can act as an essential policy cushion.
The decision, however, doesn’t impose a blanket duty with imports exceeding certain CIF (Cost, Insurance, and Freight) thresholds being exempted. For instance, hot rolled coils priced above $675/MT, cold rolled sheets above $824/MT, and colour-coated steel above $964/MT will not attract the duty. This provides continued access to premium or speciality steel products not readily available from Indian mills.
Furthermore, the duty doesn’t apply to most developing countries except for China and Vietnam, highlighting the targeted approach of the policy decision.
While the policy favours large producers, the impact on MSMEs is more nuanced. On one hand, enterprises in steel processing, fabrication, and downstream manufacturing may gain from decreased price fluctuations and more balanced playing field relative to imported goods. The import duty may also encourage greater local sourcing and promote stronger backward linkages with domestic primary steel producers.
On the other hand, MSMEs relying on imported flat steel, particularly in niche applications or high-precision segments, may experience an increase in input costs. Sectors such as automotive components, engineering goods, and construction infrastructure where MSMEs play a vital role in the supply chain may experience short-term strain on operating margins.
The price threshold framework, however, offers partial relief, helping MSMEs to continue importing high-grade steel above the exempted price points without extra duty implications.
Globally, the steel industry is oversupplied, with China, which manufactures over 50 per cent of the world’s steel, pushing exports amid a slowdown in its domestic demand. Also, compounded by economic headwinds being faced by the US and Europe is driving Asian producers to channel surplus supplies to markets such as India.
India, among the key steel markets in the world, has increasingly turned into a dumping ground for excess global steel supplies. The safeguard duty announced by the government targets preempting long-term damage to India’s manufacturing capacity, while being compliant with WTO rules under Article XIX of the GATT framework that allows member nations to temporarily restrict imports to protect a particular domestic industry from the impact of excessive imports.
