India’s Directorate General of Trade Remedies (DGTR) has proposed a 12% safeguard duty on select steel imports for three years, a measure designed to protect domestic steel producers from a surge in low-cost imports. Announced on August 17, 2025, this follows a provisional 12% duty imposed on April 21, 2025, targeting non-alloy and alloy steel flat products like hot-rolled coils, sheets, plates, and cold-rolled coils. As the proposal awaits approval from the Central Board of Indirect Taxes and Customs (CBIC), it has ignited a debate between domestic steel giants and downstream industries, particularly micro, small, and medium enterprises (MSMEs), over its potential impact on costs and competitiveness.
The DGTR’s recommendation stems from a sharp rise in steel imports, which jumped from US$ 2.29 million tonnes in 2021-22 to US$ 6.61 million tonnes between October 2023 and September 2024. This influx, primarily from China, South Korea, Japan, and Vietnam, has been driven by global trade diversions, exacerbated by the United States’ 25% tariffs on steel imports. The DGTR notes that these imports have eroded market share, reduced profitability, and led to underutilized domestic production capacity, posing a serious threat to Indian steelmakers like JSW Steel, Tata Steel, and Steel Authority of India Limited (SAIL).
Structure of the Proposed duty
The safeguard duty is structured to decrease over time: 12% in the first year, 11.5% in the second, and 11% in the third. To lessen the impact on certain sectors, exemptions are included for imports priced above US$ 675 per metric tonne for hot-rolled products and US$ 964 per tonne for color-coated coils. Imports from developing countries, except China and Vietnam, are also exempt, as their share is below 3% of total imports. Specialty steels, such as tinplate and stainless steel, are excluded to avoid disrupting industries like electronics and automotive manufacturing.
Domestic steel producers have welcomed the duty, with stock prices reflecting optimism. Following the provisional duty announcement in March 2025, SAIL’s shares surged by up to 5%, NMDC Steel by over 8%, Tata Steel by 2.52%, and JSW Steel by 1.35%. Analysts from JP Morgan and Crisil predict a price increase of Rs 1,500-2,000 per tonne, boosting earnings for local producers. ICRA estimates that the duty could halve steel imports in FY 2025-26, providing significant pricing support amidst low global prices driven by high inventories.
Pushback from Downstream industries
Despite the benefits for steelmakers, the duty has drawn criticism from MSMEs and user industries. The Global Trade Research Initiative (GTRI) argues that the import surge was predictable, not sudden, questioning the DGTR’s rationale. India’s steel demand in FY25 reached US$ 137.82 million tonnes, outpacing domestic production of US$ 132.89 million tonnes, highlighting the need for imports. Critics warn that the duty, combined with Quality Control Orders, could lead to price hikes and cartelization, reducing competitiveness for sectors like automotive, infrastructure, and renewable energy. The Engineering Export Promotion Council of India (EEPC) has urged measures like tariff rate quotas to support MSMEs.
The safeguard duty aligns with global trends, as countries like the EU, Canada, and South Africa have imposed duties ranging from 25% to 50% to counter redirected steel exports. The U.S. tariffs, intensified in 2025, have particularly impacted India, with Chinese imports alone rising to US$ 2.3 million tonnes in FY24-25, a 6% year-on-year increase. However, the duty risks straining trade ties with Japan and South Korea, where 70-80% of steel imports benefit from free trade agreements.
The stainless steel sector faces unique challenges, with the Indian Stainless Steel Development Association (ISSDA) seeking separate anti-dumping duties on imports from China, Vietnam, and Indonesia, which hit US$ 1.73 million tonnes in FY25. This reflects broader concerns about global oversupply and dumping, which threaten India’s domestic industry.
Balancing Protectionism and Liberalization
The safeguard duty supports India’s “Make in India” initiative but raises questions about its alignment with trade liberalization. Critics argue that higher steel prices could undermine downstream manufacturers, particularly MSMEs, which account for 60% of engineering goods exports. The government has opened a 30-day consultation period and plans an oral hearing to address these concerns. Steel Minister H.D. Kumaraswamy has emphasized finding a balanced solution to protect both producers and users.
As India navigates this complex trade landscape, the safeguard duty’s final approval will be critical. While it promises to bolster domestic steelmakers, its impact on costs, competitiveness, and trade relations remains a point of contention. The finance ministry’s decision will shape whether this measure strengthens India’s steel industry or risks disrupting its broader industrial ecosystem.
