Safeguard duty on select steel products will provide protective cushion for local producers: Experts

New Delhi, Jan 1 (PTI) The government's decision to impose safeguard duty on select steel products will provide a protective cushion for local producers and protect downstream supply chain producers, said experts.

The government has extended safeguard duties on imports of certain steel products for three years.

The safeguard duty will be levied at 12 per cent in the first year (April 21, 2025 to April 20, 2026), reduced to 11.5 per cent in the second year (April 21, 2026 to April 20, 2027), and further lowered to 11 per cent in the third year (April 21, 2027 to April 20, 2028).

Ranjeet Mehta, Secretary General, PHDCCI, said India's safeguard duty on steel imports aims to balance the domestic market by reducing pressure from low-cost foreign steel. It provides a protective cushion for local producers and, at the same time, protects downstream supply chain producers.

The duties, first imposed as a temporary 12 per cent levy for 200 days in April, will now remain in force until April 2028, according to an official notification.

Industry body Assocham said by placing an 11-12 per cent duty on specific steel products, with a phased reduction over the notified period, the government has sent a clear message that fair competition and self-reliance remain central to India's industrial strategy.

Sumit Jhunjhunwala, Vice President & Sector Head, Corporate Sector Ratings at ICRA, said the duty signals the government's intent to safeguard the domestic steel industry from global supply disruptions.

He noted that while Chinese hot-rolled coil (HRC) prices have softened, the duty ensures domestic HRC prices stay at a discount of USD 35-40 per tonne, aiding local mills. Jhunjhunwala, however, cautioned that if Chinese HRC prices drop below USD 435 per tonne, the effectiveness of the safeguard duty could reduce significantly.

Druv Goel, CEO of market research firm BigMint, said, "The move is expected to support domestic steel prices, which will be at a discount over imports. Indian mills have already raised prices by Rs 1,500-2,000/tonne across categories in the last few weeks, and with January-March being a peak demand period, prices are likely to remain firm." According to Sandeep Kumar Jalan, Managing Director, A-One Steel India, the duty is essential to shield the domestic industry from volatile price shocks, ensuring revenue stability and operational viability amid challenging headwinds and significant domestic capacity expansion.

Harsh Bansal, MD of steelmaker BMW Industries, said the government has viewed a surge in low-priced inflows, mainly from China and Vietnam, as "serious injury" and a threat to the domestic industry.

"This is a step in the right direction that will support the growth of the Steel industry in India. The three-year timeline provides ample visibility on import impacts and capex to be undertaken," he said. PTI ABI DRR