In a significant move to protect its domestic steel industry, the Indian government has imposed a 12% provisional safeguard duty on certain steel imports. This decision, effective from April 21, 2025, aims to counter the surge of inexpensive steel imports, primarily from China, South Korea, and Japan, which have been impacting local manufacturers.
Background: Rising Imports and Domestic Challenges
India, the world’s second-largest crude steel producer, has faced a substantial increase in steel imports over the past year. In the fiscal year 2024/25, finished steel imports reached a nine-year high of 9.5 million metric tons, marking the second consecutive year where imports outpaced exports. This influx, especially of low-cost steel, has pressured domestic producers, leading some smaller mills to scale down operations and consider job cuts.
Government’s Response: Safeguard Duty Implementation
Responding to these challenges, the Directorate General of Trade Remedies (DGTR) recommended a 12% safeguard duty on specific steel products for 200 days. The Ministry of Finance acted on this recommendation, implementing the duty to provide immediate relief to domestic producers. The duty targets various steel products, including hot-rolled coils, sheets, plates, cold-rolled coils, and color-coated sheets. Notably, imports priced above certain thresholds are exempt to ensure fair competition.
Market Reaction: Steel Stocks on the Rise
The stock market responded positively to the announcement. Major steel companies saw their shares surge in early trading on April 22:
• Tata Steel: Up by 2.6% to ?142.85
• SAIL: Increased by 2.5%
• Jindal Stainless: Rose by 2.5%
• Jindal Steel and Power: Gained 1.9%
• NALCO: Advanced by 1.6% to ?163.90
The Nifty Metal index also climbed, marking its sixth consecutive gain, reflecting investor confidence in the sector’s prospects following the duty imposition.
Industry Perspectives: Support and Concerns
Industry leaders have welcomed the government’s decision. T. V. Narendran, CEO & MD of Tata Steel, stated, “Unchecked imports threaten domestic manufacturing, employment, and future investments. This decision will help restore fair competition and ensure the industry’s long-term sustainability.”
However, some concerns have been raised by downstream industries. MSME exporters in the engineering sector fear that increased raw material costs due to the duty could impact their competitiveness in international markets.
Looking Ahead: Balancing Protection and Growth
The safeguard duty is a strategic move to bolster India’s steel industry against unfair trade practices. While it offers immediate relief to domestic producers, the government must also address the concerns of downstream industries to ensure a balanced approach that promotes both protection and growth.
Sources:
• Reuters, “India to put 12% temporary tariff on steel to curb cheap China imports,” April 21, 2025.
• Economic Times, “Metal stocks surge up to 3% as India imposes 12% safeguard duty on steel imports for 200 days,” April 22, 2025.
• S&P Global, “India imposes 12% safeguard duty on flat steel imports for 200 days,” April 21, 2025.
• Moneycontrol, “India imposes 12% safeguard duty on some steel products to curb cheap China imports,” April 21, 2025.
• Livemint, “From Tata Steel, SAIL to JSW Steel— metal stocks rise 1-2%. Here’s why,” April 22, 2025.
Note: This article is for informational purposes only and does not constitute investment advice.
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