Safeguard Duty on Steel Imports Sparks Debate Over Sectoral Impact

The Directorate General of Trade Remedies (DGTR) has imposed a three-year safeguard duty on steel imports, starting at 12% in the first year, citing a sharp rise in imports—especially from China—and a 76% drop in domestic producers’ profits, amounting to "serious injury." However, a report by the Global Trade Research Initiative (GTRI) warns that the move could cripple downstream industries like automobiles, engineering, and construction, by increasing input costs and reducing competitiveness. Over 250 stakeholders, including Tata Motors, Maruti Suzuki, Hyundai, Samsung, LG, and Siemens, opposed the duty, highlighting that many specialized steel grades are not produced domestically and must be imported. The duty covers key products like hot-rolled, cold-rolled, and coated steel. While Chinese steel exports surged 25% in 2024, with hot-rolled coils entering India at $450/MT (still $87 cheaper than local rates post-duty), GTRI argues India remains a net steel importer, with demand (137.82 MT) outpacing domestic production (132.89 MT) in FY24–25. GTRI also challenged the rationale, noting that major steelmakers like Tata Steel (21% EBITDA margin) and SAIL (11.6%) are not in distress. It cautioned that the duty, combined with Quality Control Orders, may create cartel-like conditions, protecting a few large producers at the expense of broader manufacturing sectors. The debate underscores the tension between protecting domestic industry and safeguarding the competitiveness of India’s export-oriented and input-intensive industries.