In a decisive move to safeguard its domestic steel industry, the Indian government announced a 12% safeguard duty on steel imports, effective immediately for 200 days. The measure, notified by the Ministry of Finance on Monday, comes amid rising concerns over a potential flood of cheap steel imports—particularly from China—following global trade disruptions triggered by U.S. tariffs under the Trump administration.
Why the Duty Was Imposed
The decision follows recommendations from the Directorate General of Safeguards (DGS), which warned of a surge in low-priced steel imports threatening India’s manufacturing ecosystem. With the U.S. imposing steep tariffs on Chinese steel, surplus inventories from China and other Asian nations like Japan and South Korea are increasingly targeting markets like India. This has led to a sharp rise in India’s steel imports, which hit a nine-year high of 9.5 million tonnes (mt) in FY25, while exports plummeted to a decade-low of 5 mt. The country has now become a net steel importer, with a trade deficit of 4.5 mt—the highest in 10 years.
How the Safeguard Duty Works
Unlike standard customs duties, the 12% safeguard tax applies universally to all steel imports, circumventing limitations posed by free trade agreements (FTAs). Officials clarified that this temporary measure aligns with global trade norms and offers quicker relief to local manufacturers compared to prolonged anti-dumping investigations. While the steel industry initially sought a 25% duty—matching U.S. tariffs—the government opted for a balanced 12% rate to stabilize supply chains without escalating trade tensions.
Broader Implications
The duty aims to curb predatory pricing practices and support India’s $100 billion steel sector, which employs over 2 million people. However, critics argue that prolonged protectionism could strain diplomatic ties and disrupt raw material access for downstream industries like automotive and construction.
The Road Ahead
With global steel markets in flux, India’s move reflects a strategic effort to insulate its economy from external volatility. As the 200-day period progresses, policymakers will monitor market dynamics to assess whether extensions or adjustments are needed. For now, the duty serves as a stopgap to shield domestic producers while the industry navigates a challenging global trade landscape.
