Safeguard duty on steel: More than a safety net, but is it enough?

Can the safeguard duty on steel be more than a safety net, and is it enough when other countries are also stepping up to protect their interests?

A surge in cheap imports, coupled with the threat of trade diversion triggered by a global trade war reignited by US President Donald Trump, has prompted the need to safeguard India’s steel interests. Given that steel is the backbone of any economy, the stakes are high. 

So on March 18, the Directorate General of Trade Remedies (DGTR), under the commerce and industry ministry, recommended a provisional 12 per cent safeguard duty on select steel imports for a period of 200 days. 

This came days after the Trump administration had revoked the relaxations on steel imports under Section 232 and reinstated the full 25 per cent duty, effective March 12, which it doubled to 50 per cent starting June 4. The move reflected a rise in steel protectionism that has been building in recent years across economies. 

Five months on, on August 16, when the DGTR issued its final recommendation of a safeguard duty starting at 12 per cent on certain non-alloy and alloy flat steel products for three years, the world looked dramatically altered, with geopolitics and trade alignments in a state of flux. 

The Centre’s trade remedies watchdog witnessed a sudden, sharp increase in imports, and the serious injury caused by it to the domestic industry. It proposed a phased duty: 12 per cent in the first year, 11.5 per cent in the second, and 11 per cent in the third. The duty would not be imposed if the products landed in India over a threshold price on a costs, insurance, and freight (CIF) basis. (CIF is an international shipping agreement that represents the seller’s responsibility to cover the costs, insurance, and freight while the cargo is in transit.) 

The petition for a safeguard duty was filed by the Indian Steel Association on behalf of its members — ArcelorMittal Nippon Steel India (AM/NS India), JSW Steel, Jindal Steel & Power, and Steel Authority of India Ltd (SAIL). 

DGTR, while making the recommendation, noted that the rush of trade remedy and other protective measures against steel products by various countries posed a threat of serious harm to the domestic industry. 

On the link between trade remedy measures and trade diversion, it found that imports of certain products into the US had declined by 2.183 million metric tonne (mmt) in 2023 compared to 2021, while imports into India had recorded a significant increase during the corresponding period. Among the major contributors were Japan, China, Korea, Vietnam. 

In this backdrop, does the safeguard duty — which still requires the finance ministry’s approval — serve merely as a safety net or could it act as a springboard for the billions of dollars worth of capacity addition by the domestic steel industry? That remains an open question. There is also the question of whether the industry believes that the duty is enough to safeguard domestic interests at a time when other nations, too, are stepping up to protect theirs. 

In public interest 

As the DGTR mentioned in its final findings, a vibrant steel industry has historically been the foundation of a nation’s rapid industrial development. From infrastructure and construction to automotive, defence, and manufacturing, there is a little, or a lot of, steel in everything. 

The National Steel Policy, announced in 2017, had set an ambitious target of 300 million tonne (mt) of steelmaking capacity by 2030 — a jump of more than 51 per cent over the FY25 level of 198.5 mt. 

Leading the investment table are private sector steel companies — JSW Steel, Tata Steel, Jindal Steel, AM/NS India – and the public sector SAIL. 

The DGTR mentioned that when imports increase significantly, causing,  or threatening to cause serious injury to domestic steel producers, it is in public interest to put in place trade remedy measures in accordance with the law to protect domestic producers. 

The stated policy objectives cannot be achieved if increased imports are not arrested, it believed. 

Necessary versus sufficient 

The domestic industry has welcomed the safeguard duty, but a broader policy support might be required to keep the capex momentum going. 

Jayant Acharya, joint managing director and chief executive officer, JSW Steel, said the final safeguard was welcome and necessary, given the external challenges and uncertainties. “India’s ability to export is getting restricted,” he said. “As we add capacities, we also have to be mindful of the margins. Those have to improve for us to be able to spend on growth projects.” 

He added that India is a domestic-led economy. So, consumption growth is a key driver. He was of the view that the goods and services tax (GST) reform would be a big booster — “not only in terms of driving consumption, but also by creating a positive sentiment that reforms are being made to improve the overall standard of living.” 

On investment in capacity expansion, T V Narendran, MD and CEO, Tata Steel, said the safeguard duty gave comfort in the medium term. “We, however, need to be watchful of the trade actions being taken by other countries and the consequences those will have, directly or indirectly, on us,” he added. “We need to continue to work on the cost of doing business and the ease of doing business at the Centre, state and district levels.” 

In times of such heightened geopolitical sensitivity and tariff uncertainty, governments around the world are working to safeguard their respective country’s interests, added Ranjan Dhar, director and vice president — sales & marketing, AM/NS India. “The Indian government, too, has taken strong steps, including imposing safeguard duty on steel imports.” 

However, the industry expected more measures for parity with duties imposed by other countries to support investment as envisioned by the steel policy, he said. 

The industry’s ask was a 25 per cent safeguard duty. 

Impact on prices 

Meanwhile, steel prices have been in a flux. 

Prices hit a low in December 2024, and then started moving up in the runup to the provisional safeguard duty of 12 per cent on imported steel. 

However, the early onset of monsoon, a deceleration in manufacturing activity, a decline in global steel prices, and tariff uncertainties turned end-consumers cautious, said Sehul Bhatt, director, Crisil Intelligence, a research consultancy. 

Between mid-May and July-end, prices plunged by ₹2,000–2,500 per tonne. In August, however, mills increased listed prices. It is, however, unclear whether this is a flash in the pan or if prices have actually rebounded. 

Bhatt said the market hasn’t yet absorbed the full extent of the increase. 

Data from BigMint shows that for August 2025, the average hot rolled coil (HRC) prices ex-Mumbai increased by about ₹550 per tonne compared to July 2025 – touching ₹49,978.57 versus ₹49,422.22 per tonne. But year-on-year, prices had fallen. The average for August 2024 was ₹50,544.44 per tonne and for August 2023, ₹56,333.33 per tonne. 

There is a silver lining in China, though. The single largest producer and consumer of steel, China continues to set the course for the global market. By the end of July, prices of hot rolled coil — a benchmark for flat steel — in China were up $30-$35 per tonne. 

The sharp rebound in Chinese HRC prices has been driven by higher raw material costs (iron ore and coking coal) and improved market sentiment, pointed out Icra Vice-President Sumit Jhunjhunwala. 

He added that despite safeguard duties, Chinese steel had been available at levels below domestic prices, 

exerting downward pressure on domestic realisations. 

“At present, domestic HRC prices trade at a discount to Chinese offers, but remain at a premium to Japanese and Korean imports, owing to the absence of Customs duty and social welfare surcharge on the latter,” Jhunjhunwala explained. “As a result, competitive imports from Japan and South Korea are likely to cap any material upside in domestic prices in the near term.” 

For now, the industry’s bet is on a stronger second half and a reforms push from the government. Those might help lift demand while prices look to find a firm footing.