India is planning to impose a temporary 25% tariff on steel imports to curb the cheap imports of Chinese steel, according to industry and government sources who spoke to Reuters.
This temporary tariff, known as a “safeguard duty,” received broad support at a meeting chaired by Indian Commerce Minister Piyush Goyal on Tuesday, December 17.
Previously, small businesses in India had expressed opposition, but they abandoned their initial objections after receiving assurances that they would not be negatively impacted by rising steel prices.
“It appears that the ‘safeguard duty’ will be imposed after an investigation, which may be completed within a month,” an industry official who attended the meeting told Reuters. “In order to address concerns of small manufacturers, large steel producers will supply them with steel at reduced prices.”
India’s Directorate General of Trade Remedies (DGTR) is investigating whether cheap products imported from China are harming the interests of domestic steel manufacturers. Once the investigation is concluded, the government may impose the temporary tariff.
Pankaj Chadha, Chairman of the Engineering Export Promotion Council (EEPC) of India, stated after the meeting that “registered Micro, Small, and Medium Enterprises (MSMEs) will obtain raw materials at the FOB (Free on Board) export price.”
Chadha mentioned that small manufacturers consuming approximately one million tons of steel per year are expected to benefit from this arrangement, with prices about 20% lower than market prices.
A government official familiar with the matter revealed that ensuring affordable steel supply to Indian small industries will pave the way for the imposition of temporary taxes on steel imports, eliminating a major obstacle. The Ministry of Commerce declined to comment.
Major producers in India, such as JSW Steel, Tata Steel, and ArcelorMittal Nippon Steel India, have expressed concerns about the cheap imports from China.
India became a net importer of steel in the fiscal year 2023/24, and this trend has continued with import volumes steadily increasing. Import volumes in the first seven months of this fiscal year have reached a historic high, shocking hundreds of small steel manufacturers in India. This prompted the Indian Ministry of Steel to propose a 25% safeguard duty on flat steel products for two years to curb the cheap imports from China.
After the real estate sector in China, the engine of economic growth, faced a crisis, the Chinese authorities urgently turned to the manufacturing industry in an attempt to find an alternative engine to revive the economy, leading to overcapacity. Exporting products abroad became a solution, but this has sparked resistance globally.
The Wall Street Journal previously reported that many developing countries are pushing back against the pressure brought by cheap Chinese imports, which have led to job losses and hindered domestic manufacturing development. Many countries have pinned their hopes on expanding manufacturing, believing it to be the best way to drive economic development and enhance international standing.
In May, the United States increased tariffs on steel and aluminum imports from China; in August, Canada announced tariffs on Chinese steel and aluminum products. The United States, Canada, and the European Union have also imposed varying tariffs on Chinese imports of electric cars.
According to the non-profit organization Global Trade Alert, in response to the dumping of cheap Chinese products, developing countries have implemented nearly 250 trade defense measures affecting Chinese imports since early 2022, including tariffs, anti-dumping investigations, and anti-subsidy investigations. Brazil has taken over 120 intervention measures. The Brazilian government recently doubled import tariffs on certain steel products like wire and cables, but businesses are calling for a complete restriction on imports.