India Follows Trump in Imposing Tariffs to Combat World's Steel Excess

Only a week after President Donald Trump imposed levies on all US imports, India is set to join the global wave of steel protectionism by announcing plans for broad trade tariffs. As several countries erect barriers to stave against an influx of metal, especially from billion-ton manufacturer China, the world steel market is in turmoil. In a statement released on 18 March, the Indian Commerce Ministry suggested imposing interim "safeguard" taxes of 12% on a variety of steel items. According to the ministry's statement, safeguard measures are employed when there is a surge of unanticipated, unfavourable imports that harm the domestic industry permanently or threaten to do so.

Why India has Opted for this Move?

Along with nations from Asia, Europe, and Latin America, India, the second-largest steel producer in the world, is requesting tariff relief. Trump's 25% tariffs threaten to drive metal to other markets, and China's property crisis has caused its steel exports to soar, adding to a global excess at a time when demand is weak. The preliminary ruling, which came after an examination by the nation's trade commission, states that the planned taxes on Indian imports will be in effect for 200 days. Following a public hearing and 30 days of consultation, a final decision will be made. Despite output reductions, China continues to generate far more steel than it needs domestically, and exports reached a nine-year high in 2024. India also mentioned the effects of various trade restrictions throughout the world, as well as the slowing demand and the expansion of steel capacity in Asia more generally. According to the ministry, there are urgent situations in which failing to apply for temporary safeguards could result in harm that would be challenging to undo. According to government figures, China's completed steel imports increased by 80% to 1.6 million tonnes in the first seven months of 2024.

In the notification, the Federal Trade Ministry's Directorate General of Trade Remedies (DGTR) stated that the authority believes a 12% provisional safeguard duty will be suitable to eradicate the substantial harm and threat it poses to domestic industry. According to the notice, the DGTR has also requested feedback on its conclusions within 30 days, after which an oral hearing will be held before a final judgement is made.

Ongoing Scenario of India’s Steel Sector

India's steel production has increased significantly over the last ten years, but it still only accounted for 15% of China's output last year. In order to support the nation's industrialisation and urbanisation, its producers have ambitious long-term expansion goals. The large group of steelmakers who had requested the investigation through the Indian Steel Association will feel some relief if the duty is enforced. The government had been asked by a number of producers to impose a four-year safeguard duty.