Safeguard Duty Debate: Steel Imports' Impact on Indian Market

India is investigating a surge in steel imports, consulting MSMEs and downstream industries before deciding on a safeguard duty. Despite domestic pressure for a 25% duty, concerns from MSME exporters highlight the risks of increased raw material costs affecting competitiveness. Steel imports comprise only 6% of domestic production.

The Directorate General of Trade Remedies (DGTR) has embarked on a detailed investigation into a reported surge in steel imports, considering the implications for MSME downstream industries before reaching a conclusion, according to a senior government official.

Commerce Secretary Sunil Barthwal revealed that the investigation follows a request from the steel ministry aimed at evaluating the necessity of safeguard measures on steel imports to shield domestic markets from foreign competition, particularly against the backdrop of alleged overcapacity in international steel production.

Discussions have been initiated with key stakeholders, including MSMEs and downstream users, as the potential imposition of a 25% safeguard duty looms. While some large domestic steel manufacturers support the duty, others, particularly engineering exporters, warn that such measures could escalate input costs, undermining export competitiveness.

Reports indicate that a significant percentage of imports originate from FTA countries, which might render the duty ineffective, as current imports form a mere 6% of domestic output, with imports consisting mainly of essential materials and specialized items not sufficiently produced locally.

(With inputs from agencies.)