DGTR recommends 3-year safeguard duty on steel imports; 12% in Yr 1, 11.5% in Yr 2 and 11% in Yr 3

India’s trade remedy body, the Directorate General of Trade Remedies (DGTR), has recommended a three-year, staggered, safeguard duty on imports of hot-rolled flat products of non-alloy and other alloy steel, after finding that the surge in inflows has caused “serious injury” and poses a “grave threat” to the domestic industry.

The proposed safeguard duty rates, as mentioned in the final findings report, will be levied at 12 per cent in the first year, 11.5 per cent in the second, and 11 per cent in the third, with a mid-term review clause built-in.

This comes on the back of a 12 per cent provisional safeguard duty imposed in April 2025, which runs until November.

Safeguard duty is a temporary tariff on import.

Amongst the countries impacted include China, Vietnam and Nepal, depending on the nature of the imported offering.

For instance, it has been suggested that hot rolled coils, sheets and plates imported from developing countries “other than China and Vietnam may be exempt”; whereas cold rolled coils and sheets and colour-coated sheets imported from developing countries, “other than China and Nepal” may be exempt.

Scope of the duty

The recommendation covers a broad product basket: hot-rolled coils, sheets and plates; plate mill plates; cold-rolled coils and sheets; metallic-coated steel (galvanised, aluminium-zinc, zinc-magnesium); and colour-coated coils and sheets. Excluded are stainless steel, electrical steel, tin mill products and API line pipes.

The DGTR’s analysis found that India’s imports of these flat products have surged in both absolute numbers and as a share of domestic consumption.

The spike has coincided with global overcapacity, especially from China, Korea and Japan, being redirected to India.

Questions were sent to 37-odd producers in exporting countries that inlcude the like of Hyundai Steel, Arcelor Mittal, Kobe, among others. And there were 272 submissions that included likes of Tata Motors, among other car-makers, embassies of different countries, associations and lobby group of different countries, etc.

The price collapse

The findings reveal a dramatic erosion of global steel prices.

Export offers for hot-rolled coil fell to $450 per tonne in May 2025, lower than levels 30 years ago. According to World Steel Dynamics, Chinese mills were selling below cost, incurring losses of nearly $90 per tonne, it noted.

DGTR concluded that such inflows “significantly undercut” Indian producers, suppressing prices and wiping out profitability even as companies ramped up capacity.

Without safeguards, the National Steel Policy, which targeted of 300 million tonne of capacity by 2030, and requires annual investments of over ₹2 lakh crore, would be jeopardised.

The recommendation is a major win for domestic majors, including SAIL, JSW Steel, Jindal Steel and ArcelorMittal Nippon Steel India (AM/NS India). These companies had petitioned for protection, pointing to losses despite strong demand.

Auto industry bristles

But downstream users, especially car-makers, strongly opposed the move.

Maruti Suzuki, Hyundai Motor India and the Society of Indian Automobile Manufacturers (SIAM) made representations during hearings, warning that the duties will drive up costs and disrupt supply chains.

SIAM stressed that critical automotive-grade steels—high-strength cold-rolled and coated products—are either unavailable or insufficiently produced in India.

Hyundai flagged that safeguard duties would “severely constrain supply chains” for vehicle makers competing in export markets, while Maruti warned that a 10–15 per cent rise in steel input costs could cascade into higher vehicle prices, possibly dampening demand in India’s cost-sensitive market.

Electronics and appliance manufacturers, including LG and Godrej also cautioned that costs of appliances and industrial products could rise by 4–15 per cent.

The DGTR clarified why it was not imposing higher duty as sought by “certain interested parties.”

“Certain interested parties submitted that there is no basis for imposition of a safeguard duty at the rate of 25 per cent. It was further submitted that there is no basis for adoption of a 22 per cent return on capital employed in computing the appropriate rate of duty,” the report said.

Global pushback

The safeguard recommendation has already drawn sharp criticism from exporting countries.

Countries like Japan, Korea, the EU and Russia have argued that the measure is “excessive” and “legally unsustainable” under WTO norms. They claim that much of their exports to India are specialised grades not produced domestically, and therefore cannot be held responsible for injury.

Korea’s steel industry body, KOSA, argued that Indian mills cannot supply certain automotive-grade and colour-coated products, while Japanese mills like Nippon Steel and JFE said they supply niche grades essential for AM/NS and automotive producers.

The EU added that while Indian mills expanded output, “profitability concerns stemmed from cost escalation, not just imports.”

What next?

The Finance Ministry will now decide whether to implement DGTR’s recommendation.

If notified, this would mark India’s first major safeguard action in steel in nearly a decade, underlining the Modi government’s resolve to defend core industries.

The DGTR emphasised that the duties are temporary, meant to provide “adjustment time” for the industry to restructure costs and diversify product offerings.

Published on August 17, 2025

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