India proposes temporary tax on steel imports to protect domestic industry

India's government has recommended a 12 per cent temporary tax, known locally as a safeguard duty, on certain steel products for a period of 200 days in an effort to curb imports and protect the domestic steel industry.

The proposed tax was announced in a government notice published on March 18, Caliber.Az reports per foreign media.

"The Authority considers that a provisional safeguard duty of 12 per cent will be appropriate to eliminate the serious injury and threat thereof to the domestic industry," stated the Directorate General of Trade Remedies (DGTR), a body under the federal trade ministry. The DGTR has called for public comments on its findings within the next 30 days, after which there will be an oral hearing before a final decision is made.

In December of last year, the Indian government initiated an investigation to assess whether a safeguard duty or temporary tax should be imposed to limit steel imports, particularly from countries like China, South Korea, and Japan. India's steel imports from these nations reached record levels during the April-January period, making the country a net importer of finished steel, as reported earlier by Reuters.

The influx of cheap Chinese steel has posed a significant challenge for India’s smaller steel mills, forcing some to scale down operations and consider job cuts. As a result, India has joined a growing number of countries contemplating action to stem the rising tide of imports.

Steelmaker shares in India surged on March 19 following the announcement, with state-owned Steel Authority of India Ltd. gaining as much as 5 per cent. Tata Steel Ltd. rose by 2.9 per cent, while Jindal Steel & Power Ltd. advanced more than 2 per cent.

Although China's steel production has decreased, the country still produces far more steel than it requires domestically, and exports increased to a nine-year high in 2024. India has also acknowledged the impact of various trade measures globally, along with slowing demand and growing steel capacity across Asia.

"There exist critical circumstances, where any delay in application for provisional safeguard measures would cause damage which it would be difficult to repair," the ministry warned. According to government data, imports of finished steel from China surged by 80 per cent, reaching 1.6 million tons in the first seven months of 2024.

India’s steel output has been growing rapidly in recent years, though it still accounts for only about 15 per cent of China’s total output. Indian steel producers have ambitious plans to expand further, aiming to meet the demands of the country’s ongoing urbanization and industrialization.

By Vafa Guliyeva