In a significant move to shield its domestic steel manufacturers from a surge in imports, the Indian government has announced the imposition of safeguard duties on certain flat steel products. The duty, recommended by the Directorate General of Trade Remedies (DGTR), will be effective from April 1, 2025, and remain in force until March 31, 2028.
Details of the Safeguard Duty Structure
The safeguard duty will apply to imports of flat rolled products of iron or non-alloy steel, plated or coated with aluminium and zinc. This category includes a crucial material widely used in construction, automotive, and appliance manufacturing. The duty will be levied at a rate of 12% ad valorem in the first year of its implementation.
Subsequently, the duty rate will be gradually reduced. It is slated to decrease to 11% in the second year (April 2026 to March 2027) and further down to 10% in the third and final year (April 2027 to March 2028). This phased reduction is designed to provide domestic industry with a cushion against import pressure while allowing for a gradual adjustment to global competition.
Investigation and Rationale Behind the Decision
The decision follows a detailed investigation initiated by the DGTR based on an application filed by the Indian Steel Association (ISA). The probe, which covered data from 2020-21 to 2022-23, concluded that increased imports of these specific steel products were causing or threatening to cause serious injury to domestic producers.
The investigation found a significant increase in the volume of imports of these flat products during the period under review. This surge, coupled with the price pressure from cheaper imports, was adversely impacting the sales, production, and profitability of local steel mills. The imposition of the safeguard duty is a trade remedy measure permitted under World Trade Organization (WTO) rules to protect a domestic industry from such unforeseen surges in imports.
Implications for the Indian Steel Sector and Trade
This move is expected to provide substantial relief to major domestic steel players. It will help in stabilizing domestic prices and improving capacity utilization for Indian mills producing these coated flat products. The three-year window offers the industry time to enhance its competitiveness and efficiency.
From a trade perspective, the duty will impact sourcing patterns for industries that rely on imported coated steel. Importers will need to factor in the additional cost, which may lead to a search for alternative suppliers or a shift towards domestic procurement. The government's action underscores its continued focus on implementing strategic trade policies to support key foundational industries like steel, which is vital for infrastructure and manufacturing growth under initiatives like 'Make in India'.
While the duty offers protection, its phased reduction over three years signals a balanced approach, aiming to avoid making domestic industry perpetually reliant on safeguards and encouraging gradual adaptation to global market dynamics.
