The Directorate General of Trade Remedies (DGTR) recommended a provisional safeguard duty on certain steel products on March 18, 2025, with a 12% ad valorem rate for 200 days. This recommendation was made in a notification issued by the DGTR, citing critical circumstances where delays in applying the duty would cause irreparable damage. The Finance Ministry will make the final decision on imposing the duty.
What is Safeguard Duty?
Safeguard duty is a temporary import tax imposed by a government to protect its domestic industry from a sudden and significant increase in imports that could cause serious economic harm. Unlike anti-dumping duties, which are imposed to counter unfair pricing, safeguard duties are applied even when imports are fairly priced but still pose a threat to local manufacturers due to volume. In India, such duties are recommended by the Directorate General of Trade Remedies (DGTR) after a detailed investigation.
Reason for the Safeguard Duty
- Surge in Imports:
There has been a significant increase in steel imports from countries like China, South Korea, Japan, and Vietnam, adversely affecting domestic producers. - Impact on Local Industry:
Leading domestic manufacturers, including JSW Steel, Tata Steel, and ArcelorMittal Nippon Steel India, have reported declining profitability, production cuts, and growing inventories. - Market Distortion:
Imported steel is often priced lower than domestically produced steel, leading to unfair competition.
Scope of the Proposed Duty
The recommended 12% duty applies to the following non-alloy and alloy steel flat products:
- Hot-Rolled Coils (HRC)
- Cold-Rolled Coils (CRC)
- Sheets and Plates
- Metallic Coated Steel
- Color-Coated Coils and Sheets
Exemptions:
Products like stainless steel, cold-rolled grain-oriented electrical steel, and aluminum-coated steel are excluded from the duty.
Potential Impact
- Support for Domestic Producers:
The safeguard duty is expected to reduce imports by up to 50% in FY 2025-26, offering relief to domestic steelmakers. - Increased Steel Prices:
Industries that rely heavily on imported steel, such as the automotive, construction, and infrastructure sectors, may face increased input costs. - International Trade Relations:
Exporting countries may contest the duty through the World Trade Organization (WTO).
Next Steps
- Stakeholder Comments:
Interested parties have 30 days to submit their comments on the findings. - Oral Hearing:
An oral hearing will follow, after which a final decision will be announced.
This proposed safeguard duty reflects the government’s commitment to protecting domestic industries from unfair competition while maintaining a balanced trade environment.
For further information, you can access detailed reports via the following links:
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