Government recommends temporary 12% tax on steel imports

India has recommended a 12% safeguard duty on certain steel imports for a period of 200 days to shield domestic manufacturers. The provisional levy is intended to rein in surging imports and help stabilise the domestic steel market. Detailed in an official notice released on Tuesday, the decision aligns with India’s broader strategy to promote self-sufficiency in the steel industry.

In a significant move to shield its domestic steel industry from mounting import pressures, India has recommended a provisional safeguard duty of 12% on select steel products for a period of 200 days. This temporary tax aims to curb the inflow of cheaper steel into the country and support local manufacturers grappling with intensified competition, particularly from East Asian exporters.

The Directorate General of Trade Remedies (DGTR), under India’s Ministry of Commerce and Industry, released the directive on Tuesday, noting that the domestic industry is facing “serious injury” and an imminent threat from surging imports. “The authority considers that a provisional safeguard duty of 12% will be appropriate to eliminate the serious injury and threat thereof to the domestic industry,” the DGTR stated in its notification.

This action follows an investigation initiated in December last year by the Indian government to examine the sharp rise in steel imports and assess the potential damage caused to local producers. The DGTR has invited comments from stakeholders within 30 days, after which an oral hearing will be held to decide on the final recommendation.

India, currently the world’s second-largest producer of crude steel, has seen an unprecedented increase in imports of finished steel, making the country a net importer during the April-January period of this financial year. According to reports, steel shipments from major exporters such as China, South Korea, and Japan reached record highs, raising concerns among Indian steelmakers about the survival of smaller mills.

Industry experts attribute much of the influx to China, which has been offloading surplus steel at competitive prices amid weak domestic demand and excess capacity. This has left Indian producers, particularly small and medium-sized enterprises (SMEs), struggling to maintain profitability. Many have scaled back operations and are contemplating workforce reductions to weather the storm.

The safeguard duty is part of a broader global trend, as several countries have taken measures to defend their steel sectors against a flood of low-cost imports. The move also underscores the Indian government’s intent to protect local industries and preserve jobs in one of the country’s core manufacturing sectors.

While the provisional tax will provide some immediate relief to domestic mills, the final decision post-hearing will determine the long-term direction of India’s steel trade policy. Market observers are closely watching the situation, as any prolonged import restrictions could also impact downstream industries reliant on steel as a raw material.

As the DGTR moves forward with its review, the Indian steel industry is hoping for decisive action that will help stabilize production and protect employment, while ensuring the sector remains competitive on the global stage.