Image Credit: Hindustan times
In a decisive move to protect its domestic steel industry from unfair trade practices, the Union finance ministry on Tuesday announced a three-year safeguard duty on steel imports, ranging from 11 percent to 12 percent. The tariff structure will see a gradual reduction of 0.5 percent annually, signaling the government’s measured approach to trade protection.
The announcement comes as India’s steel sector faces mounting pressure from a flood of cheap imports, particularly from China, raising serious concerns about predatory pricing and dumping practices that threaten the viability of local manufacturers.
Under the new duty structure, imports will face a 12 percent levy in the first year, dropping to 11.5 percent in the second year, and finally settling at 11 percent in the third year. This graduated approach reflects the government’s strategy to provide immediate relief while allowing the market time to adjust.
The tariff framework shows strategic selectivity in its application. While several developing nations have been exempted from the duty, China, Vietnam, and Nepal will face the full impact of the levy. Additionally, the measure carves out exceptions for specialty steel products, including stainless steel, ensuring that critical industrial inputs remain accessible.
Addressing a Surge in Cheap Imports
The ministry’s order explicitly addresses what it describes as a crisis facing India’s steel sector. The document states that the recent “sudden, sharp, and significant increase in imports of subject goods into India has caused and threatens to cause serious injury to the domestic industry/producers of subject goods.”
This language underscores the urgency behind the government’s intervention, as policymakers grapple with the dual challenge of maintaining competitive markets while protecting domestic employment and industrial capacity.
The current measure builds upon earlier protective actions. In April this year, the government had already implemented an interim safeguard duty of 12 percent for a 200-day period, providing temporary relief while comprehensive assessments were conducted.
Detailed Tariff Timeline
The finance ministry’s comprehensive order, formulated after reviewing findings from the Director General (Trade Remedies), establishes a clear timeline for duty implementation. The structured approach ensures predictability for both importers and domestic producers.
For imports entering India between April 21, 2025, and April 20, 2026, a 12 percent ad valorem duty will apply. This will decrease to 11.5 percent ad valorem for the subsequent year, covering April 21, 2026, to April 20, 2027. In the final year of the duty period, from April 21, 2027, to April 20, 2028, the rate will further reduce to 11 percent ad valorem.
The steel industry, which employs millions and serves as a backbone of India’s infrastructure development, has long sought government intervention against what it perceives as unfair competition. The new tariff structure represents a significant policy response that balances protectionist measures with gradual market liberalization.
Industry observers note that this move aligns with global trends where major economies are increasingly scrutinizing Chinese steel exports amid concerns about overcapacity and below-cost pricing strategies that distort international markets.
The exemption of certain developing countries from the duty reflects India’s broader diplomatic and economic strategy of supporting South-South cooperation while taking firm action against practices that harm domestic industry. However, the inclusion of Vietnam and Nepal alongside China suggests that the government’s concerns extend beyond bilateral trade tensions to encompass broader patterns of import surge regardless of origin.
