Govt considers safeguard duty on steel after import surge

Steel cos have been pushing for safeguard duty as it would also apply to companies in Japan, South Korea

A government body has found evidence that rising imports of some hot-rolled steel products from China, Japan, South Korea and Russia pose a threat to the domestic industry, potentially paving the way for an import levy known as a safeguard duty.

The Directorate General of Safeguards said on Monday it would look into whether a duty was needed after the Steel Authority of India , JSW Steel and Essar Steel filed an application in July seeking safeguard measures for a four-year period.

The steel makers have been pushing for a safeguard duty instead of an increase in an existing import tax because a safeguard duty would also apply to companies in Japan and South Korea. India has free trade agreements with these countries and gives them import duty concessions.

"The application has been examined and it has been found that prima facie increased imports of ("hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more) have caused or are threatening to cause serious injury to the domestic producers," Director General Vinay Chhabra said in a notice. 

Imports made up 5% of the country's total production of these steel products in the year to end-March 31, 2014. But they have increased since then and are on course to hit 13% this fiscal year, the companies seeking the safeguard duty told Chhabra.

Steel minister Narendra Singh Tomar said late last month the government was concerned about the problems faced by steel companies due to "dumping" by free trade agreement countries.

Total steel imports into India jumped 72% in the last fiscal year to 9.3 million tonne. South Korea and Japan, which pay duties of less than 1% due to the free trade agreements, together sent 3.5 million.

The notice said any other party to the investigation who wishes to be considered as an interested party may submit its request to Chhabra's office within 15 days.