Steel Tariffs: India Takes Action Against Surging Imports with 12% Levy
- India International Affairs South Asia
Shreya Naskar- 0
- 6 minutes read
India is joining the global wave of steel protectionism by proposing a 12% safeguard duty on certain steel imports. This move follows U.S. President Donald Trump’s decision to impose tariffs on steel imports, signalling a broader trend of trade protectionism. India’s Commerce Ministry has introduced this measure to counter a surge in steel imports that has adversely impacted domestic manufacturers. India is the world’s second-largest steel producer, but the domestic industry has been facing challenges due to a flood of low-cost imports, primarily from China. Over the past few years, steel-producing nations have been exporting surplus steel at lower prices, hurting India’s local manufacturers. Key steel producers like Tata Steel, JSW Steel, and Steel Authority of India Limited (SAIL) have been urging the government to intervene. Their concerns led to an investigation by the Directorate General of Trade Remedies (DGTR) in December 2024. The findings indicated that steel imports had significantly increased, causing: Lower capacity utilization for Indian steel manufacturers. Reduced profit margins due to price undercutting by imports. Disruptions in market stability. Given these challenges, the government concluded that an immediate safeguard measure was necessary to protect the domestic steel sector.
Key Details of the Proposed 12% Safeguard Duty
The safeguard duty aims to provide temporary relief to Indian steelmakers.
- Tariff Rate: 12% on specific steel products
- Duration: 200 days (provisional period)
- Objective: To curb the sudden surge of steel imports and stabilize the domestic market
- Affected Countries: China, South Korea, and Japan (major steel exporters to India)
Unlike anti-dumping duties, which target specific countries engaged in unfair trade practices, the safeguard duty applies broadly to address market disruptions caused by sudden spikes in imports.
While India has imposed tariffs to protect its market, it is also facing indirect consequences from U.S. steel tariffs. In 2024, the U.S. imposed a 25% duty on steel and aluminium imports, impacting global trade flows. However, India’s direct exports to the U.S. are relatively small. India’s Steel & Aluminium Exports to the U.S. (2023-24): Iron and steel: $475 million. Iron and steel products: $2.8 billion. Aluminium and related products: $950 million. The U.S. primarily imports steel from Brazil, Canada, Mexico, South Korea, and Vietnam, meaning India’s exposure to the U.S. tariffs is minimal. However, global trade restrictions have led to excess steel being diverted to other countries, including India, further exacerbating the domestic import surge. India’s decision mirrors global trends in trade protectionism: United States: 25% tariffs on steel and aluminum imports to protect its domestic industry. European Union: Implementation of steel import quotas and tariffs. China: Accused of overproducing steel, leading to concerns about market dumping. Many countries are now taking precautionary measures to shield their industries from China’s excess steel supply, which has disrupted global markets. India’s 12% safeguard duty aligns with these global trends to maintain market competitiveness and economic stability.
Major steel manufacturers in India have welcomed the move, expecting it to stabilize domestic steel prices and improve profitability. JSW Steel and Tata Steel anticipate that the measure will reduce competitive pressure from imports, allowing the industry to regain lost margins. Steel producers expect the 12% duty to allow price increases of 2-3% for long steel products, helping manufacturers recover from financial losses.
Concerns from MSMEs (Micro, Small, and Medium Enterprises)- While large steel producers are in favour of the safeguard duty, small and medium-sized manufacturers are concerned about rising input costs. MSMEs rely on imported steel for production and fear the duty will lead to higher domestic steel prices. Some industry groups have proposed import quotas instead of blanket tariffs to ensure raw material availability at competitive rates. Suggestions have been made for MSMEs to purchase steel at export parity prices to maintain cost-efficiency. India’s decision to impose a 12% safeguard duty is part of a broader global trend of steel trade protectionism. While the move is aimed at supporting domestic steelmakers, the impact on downstream industries, particularly MSMEs, remains a concern. The government must strike a balance between protecting local industries and ensuring that steel prices remain affordable for businesses reliant on steel imports. The upcoming consultations and trade discussions will determine whether the duty becomes a long-term policy tool or remains a temporary safeguard measure.
