In New Delhi, the government enacted a 12% safeguard duty on imported steel, aiming to shield the domestic steel industry from a surge of inexpensive imports. This decision was influenced by the potential for an influx of cheap steel from China, whose exports have become less economically viable due to the tariffs imposed by U.S. President Trump, making sales to the U.S. market unprofitable.
The Ministry of Finance announced the safeguard duty, effective for 200 days, through a notification issued on Monday. The notification states that the duty will remain in effect for the specified duration, unless it is revoked, superseded, or amended.
The concern revolves around the possibility of China’s steel surplus flooding major markets, including India, with inexpensive products, potentially disrupting the balance and affecting local steel companies.
Following a proposal by the Directorate General of Safeguards (DGS), the Ministry of Finance made this decision, having recommended a temporary safeguard duty for 200 days. The Ministry of Commerce had previously suggested this proposal to the Ministry of Finance for implementation.
The steel industry has expressed concern over the impact of cheaper imports not only from China but also from Japan and South Korea on their profits and expansion plans. Ranjan Dhar, Director and Vice President – Sales and Marketing at Arcelor Mittal Nippon Steel (AMNS), stated at a recent event announcing a green steel initiative, “The domestic steel industry requires protection, as the Indian market is not hunger for imported steel that has increased in recent months.”
T.V. Narendran, CEO and MD of Tata Steel, expressed his approval, stating, “We welcome the government’s decision to impose a safeguard duty on certain steel imports. This is a crucial step in addressing the surge of unfairly priced imports to India. As we have previously emphasized, unchecked imports—especially from countries with significant excess capacity—threaten domestic manufacturing, employment, and future investments. This decision will help restore fair competition, ensure the industry’s long-term sustainability, and support India’s vision of a self-reliant and globally competitive steel sector.”
Previously, Mint reported on March 10 that the DGTR had submitted its report recommending the imposition of up to 15% safeguard duty on steel imports. The steel industry had initially requested a 25% safeguard duty, the same as the U.S. duty on steel and aluminum.
Officials explained that a safeguard duty is quicker to implement and achieves the desired results. It is necessary to address cheaper imports, as a substantial share of imports also comes as a result of free trade agreements, and raising the customs duty would not have been effective in checking it. A safeguard duty will, however, apply to all imports and is a ‘complaint tax mechanism’ with all international trade pacts.
Government data shows that India’s steel imports in FY25 reached 9.5 million tonnes (mt), the highest since FY16, while exports plummeted to a decade’s low of 5 mt. India has also become a net importer of the metal as last year’s steel trade deficit hit a 10-year high of 4.5 mt. Between FY16 and FY25, India’s steel imports averaged around 7 mt, except in FY25 when they surged 15% to 9.5 mt compared to 8.3 mt in the previous year. Exports, which have been in the 8–9 mt range, dropped 35% y-o-y to 5 mt (vs 7.5 mt in FY24).
China is the largest contributor to the rise in imports last year, followed by South Korea and Japan. Vietnam, which is used by Chinese companies, has also been a significant contributor to Indian steel imports.
Industry welcomed the move. “These cheaper imports, especially from China, are not the best quality, but the Indian industry buys it since it’s cheap. If this trend continues, Indian companies may have to reconsider their expansion plans. This will be a much-needed step in the right direction,” said an executive at a company, which is a large producer of long steel used in infrastructure projects.
“The government has finally come out with the much-anticipated safeguard duty of 12% in a host of mild steel products which have seen an unusual spike in imports into India. This is much needed and a well-timed move, though the quantum could have been a bit more,” said Harsh Bansal, MD of BMW Industries. “The move will help the Indian steel makers ensure they don’t move market to cheaper imports. The government will also have to ensure the headline inflation remains within target range. Even though this is a temporary measure, it will bring relief to the steel industry,” said Bansal.
India’s steel production capacity is currently at 140 mt per annum and is planned to grow to a total crude steel capacity of 300 million tonnes by 2030-31, as per the National Steel Policy 2017.
Apart from the safeguard duty, the Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce and Industry is already conducting investigations into steel dumping. However, this process is time-consuming and typically takes several years. The plan to raise the basic customs duty on steel was also discussed by the steel and finance ministries but was ultimately abandoned, as it would not have provided enough duty protection to the domestic industry against FTA countries that account for around 75% of Indian steel imports.
