Steel prices to rise? India planning 12% import duty to protect domestic players

The import tax, known as a safeguard duty, could kick in at a time when US President Donald Trump’s sweeping import tariffs have sparked fears of a trade war.

The Indian government is planning to impose a 12% tariff on most types of steel imports to protect domestic industries. The world's second-largest steel producer, is planning to impose the tariff for a period of 200 days.

“There exist critical circumstances, where any delay in application for provisional safeguard measures would cause damage which it would be difficult to repair,” the government said in its recommendation. (Reuters)

According to a preliminary decision published by the Union Ministry of Commerce and Industry on Tuesday as a gazette notification, comments have been invited to help the ministry in making a final recommendation after a later hearing.

“There exist critical circumstances, where any delay in application for provisional safeguard measures would cause damage which it would be difficult to repair,” the government said in its recommendation.

The imposition of the import duty will being relief to Indian steel producers like Jindal Steel and Power and JSW Steel, who are among companies that have asked the government for protection from low-cost imports from countries like China.

The import tax, which is also called a safeguard tax, could become effective at a time when US President Donald Trump's tariff policies have sparked fears of a long-term tariff war.

India, along with Vietnam, is among the fast-growing Asian producers that may face a glut of steel.

India joins countries from Saudi Arabia to Vietnam and Chile in wielding trade measures to limit cheaper inflows, fueled by a surge of steel coming from China. Chinese producers have leaned heavily on exports, prompting a wave of trade measures in 2024.

Though China’s steel producers have reduced production, the country is still making a lot more steel than it needs domestically.

Safeguard measures are used “in times of increased, unfavourable and unforeseen imports that cause or threaten to cause permanent damage to the domestic industry,” the ministry’s statement said.