India is poised to impose a safeguard duty, or temporary tax, of up to 25% on steel imports to curb the influx of inexpensive steel from China, according to several media reports. The proposal gained widespread backing during a meeting chaired by Commerce Minister Piyush Goyal on Tuesday, as small industries eased their initial opposition after receiving assurances that the move would not lead to higher steel prices for them. The safeguard duty is expected to be implemented following an investigation, likely to be completed within a month, into the impact of cheap Chinese imports on domestic steel producers.

To address concerns from small manufacturers, the government has promised that large steel producers will provide steel to them at reduced prices. This would ensure that micro, small, and medium enterprises (MSMEs) are not adversely affected by the imposition of the duty. Pankaj Chadha, Chairman of the Engineering Export Promotion Council of India (EEPC), stated that MSMEs registered with the government would be able to access raw materials at Free on Board (FOB) export prices. Small manufacturers, who consume around 1 million metric tons of steel annually, would benefit from these reduced prices, which could be up to 20% lower than current market rates.

The Directorate General of Trade Remedies is conducting an investigation into whether cheap imports from China have been detrimental to India's domestic steel industry. Based on the findings of the investigation, the government is expected to impose the temporary safeguard duty. Major steel producers in India, including JSW Steel, Tata Steel, and ArcelorMittal Nippon Steel India, have voiced concerns about the growing volume of low-cost Chinese steel imports, which have been undermining the competitiveness of domestic producers.

India, the world’s second-largest producer of crude steel, became a net importer of steel in the financial year ending March 31, with imports reaching a record high during the first seven months of the current fiscal year. The surge in imports, particularly from China, has prompted the government to act. The Ministry of Steel has proposed a 25% safeguard duty on flat-steel products for two years as a measure to counteract the influx of cheap imports from China. This move is seen as a necessary step to protect India’s steel industry while ensuring that smaller manufacturers are shielded from rising steel prices.

With the backing of small industries, the safeguard duty is expected to be imposed soon, providing relief to India’s domestic steelmakers and stabilizing the industry in the face of increased foreign competition.