Steel Safeguard Duty to Raise Costs, Hit Auto Industry: GTRI

The proposed safeguard duty on steel imports stands to cause massive disruption in India’s automobile industry by increasing input cost and decreasing export competitiveness, states policy think-tank Global Trade Research Initiatives (GTRI).

The Directorate General of Trade Remedies (DGTR) suggested a three-year safeguard duty on steel imports 12% the first year, 11.5% in the second, and 11% in the third. This proposal, triggered by recommendations to the revenue department of the finance ministry, follows the imposition by the government of an interim duty of 12% for 200 days in April 2025.

GTRI reckons the measure will severely hurt automakers and component manufacturers, depending on imported grades of steel not available here. Major stakeholders like Tata Motors, Maruti Suzuki, Hyundai Motors India, and Toyota Kirloskar have objected, saying that the levy will increase their production costs, erode export competitiveness, and complicate the sourcing of customer-specific grades, with the Automobile Components Manufacturers’ Association (ACMA) also opposing it.

By May 2025, imported hot-rolled coils, a crucial raw material, landed at $450 per metric tonne—approximately $87/mt lower than domestic supplies even after duties. The think-tank argues that the safeguard duty will remove this cost advantage on automakers to either absorb higher input costs or pass on costs with higher vehicle prices.

The think-tank also questioned the very basis of DGTR’s suggestions, as Indian steelmakers continue to be profitable. For instance, Tata Steel reported an EBITDA margin of 21%, whereas state-run SAIL reported 11.6%. “The safeguard measure protects a handful of large steel producers at the expense of downstream sectors like automobiles,” said GTRI.

The auto sector of India, which provides nearly 7% of GDP and supports millions of jobs, needs competitive steel prices to stay in the race worldwide. According to GTRI, input costs that are higher would thus harm India’s position in global auto exports and disrupt the Make in India initiative.

Industry representatives are urging the government to reconsider, emphasizing that trade policies ought to be guided by considerations of long-term competitiveness of the automobile and component sector rather than short-term gains accrued by steelmakers.

The finance ministry is now expected to make a final call on the levy, having first reviewed the DGTR recommendations and made submissions from the stakeholders.