Commerce ministry proposes provisional 12 per cent safeguard duty on flat steel import
The move to protect domestic industry comes at a time of global trade war which may shape the flow of commodities in months to come
March 20, dmanewsdesk: The commerce ministry has proposed a provisional 12 per cent safeguard duty on flat steel import, raising the prospect of up to ₹5,000 per tonne increase in domestic prices which would benefit Indian producers but may hurt the user industries.
Even as the proposal, which is yet to be notified by the customs official to be effective, fell short of the steel manufacturers’ public demand of a 25 per cent duty and internal expectation of 15 per cent, it would help domestic industry claw back market share for hot and cold rolled coils and check the surge in imports at predatory prices.
The move to protect the domestic industry comes at a time of global trade war which may shape the flow of commodities in months to come. India became a net importer of steel in 2024 with imports surging to 9.22 million tonnes (mt), outpacing exports which stood at 7.6 mt, according to market intelligence firm BigMint.
Out of this, import of hot rolled coils, which eventually finds use in automobile and consumer durables, was 48 per cent.
Korea and Japan — countries India has free trade agreements (FTAs) with were major exporters to India apart from China and Vietnam.
Alarmed with a rise in import which drove the domestic prices down, Indian Steel Associations (ISA) had approached the Directorate-General of Trade Remedies (DGTR), the investigative body under the Union ministry of commerce, on behalf of its members.
The preliminary findings of DGTR said that “there is a recent, sudden, sharp and significant increase in imports of products under consideration (PUC) into India, causing and threatening to cause serious injury to the domestic industry” and hence there is a “necessity for immediate application of provisional safeguard measures’.
With this conclusion, DGTR recommended imposition of provisional safeguard duty at the rate of 12 per cent ad valorem for 200 days pending final determination on imports of the PUC.
It said that the safeguard duty would not be applicable if the HR coil, sheets and CR coil and sheets come to India at $675 a tonne and $824 a tonne (CIF basis), respectively, which would indicate that the government is mindful that user industry not suffer unduly.
Commenting on the development, T.V. Narendran, managing director & CEO of Tata Steel, one of India’s leading private sector producers, welcomed the DGTR recommendation. “We welcome the move and appreciate the support of the government,” Narendran told The Telegraph.
Ritabrata Ghosh, vice-president and sector head of rating agency Icra, observed that DGTR has taken a calibrated approach with a 12 per cent duty proposal, noting it is less than half of what the industry had demanded and also lower than the safeguard duty imposed in 2015.
“When a safeguard duty of 20 per cent was imposed in 2015, the industry was bleeding, which is not the case this time. The government has acted swiftly to protect the domestic industry from suffering further damage, given the uncertain trade environment prevailing globally,” Ghosh argued.
He declined to hazard a guess on how domestic prices would move but pointed out some of the steel items which are not manufactured abundantly (unlike HRC and CRC) in India would continue to come.
Apart from helping domestic producers of flat steel products to claw back market share, it would help steel firms to make more EBIDTA. However, the body of engineering exporters EEPC, a major consumer of steel, said the MSME industry should be protected from steep price hikes that the safeguard duty may entail.
Stocks cheer
Steel stocks staged smart gains on Wednesday on the back of DGTR proposal of 12 per cent safeguard duty which is expected to directly impact profitability of the companies positively.
Tata Steel, JSW Steel, NMDC Steel and SAIL — makers of flat steel such as HRC and CRC — are likely to benefit most from the move with benchmark HRC prices having potential to rise by as much as ₹5,000 per tonne.
NMDC Steel closed the day with 6.88 per cent gains, followed by SAIL, Tata Steel and JSW Steel rising by 3.99 per cent, 2.52 per cent and 1.35 per cent, respectively, as several brokerages came out with bullish calls for the steel makers.
HRC prices, ex-Mumbai, are hovering around ₹49,800 a tonne, according to BigMint. With a 12 per cent duty proposed, imports from non-FTA countries can cost ₹55,087 a tonne and ₹54,173 a tonne from FTA countries, the market research firm predicted, indicating clear headroom for domestic players to take price hikes.
Brokerage Nuvama said every ₹1,000/tonne change in flat products prices affect its FY26 EBITDA projections by 7 to 8 per cent for SAIL and JSW Steel, 5 per cent for Tata Steel and 4 per cent for Jindal Steel and Power.
Source: The Telegraph online
