Steel Safeguard Duty Under Review: MSMEs Raise Concerns on Rising Costs

The commerce ministry investigation arm DGTR (Directorate General of Trade Remedies) has called for an investigation to scrutinize the imports of steel into India. The probe will also involve consultations with MSME (Micro, Small & Medium Enterprises) downstream industries before any recommendations for safeguard duties are made.

Secretary of Commerce Sunil Barthwal confirmed on Monday that the ministry received a formal request from the Steel Ministry seeking safeguard duties on steel products. The DGTR will look into each aspect of the value chain for steel imports, focusing on items like hot-rolled and cold-rolled coils and their impact on downstream industries.

This will help determine if there is any production imbalance caused by excessive imports or the potential injury from overcapacity in the global steel market.

The investigation is part of a broader effort to address concerns raised by domestic steel manufacturers about the rising import volumes, particularly from Free Trade Agreement (FTA) countries, which currently face no duty. In December, the Steel Ministry proposed a 25% safeguard duty on certain steel products. This recommendation has divided opinion, with large steel producers supporting the duty to protect domestic production, while MSME exporters warn it could push up raw material costs, damaging their competitiveness.

The Federation of Indian Export Organisations (FIEO) and other MSME associations expressed concerns that higher input prices could make Indian products uncompetitive on the global stage. The Hand Tool Association’s Chairman, S.C. Ralhan, emphasized that MSME engineering exporters are already facing liquidity issues and rising steel prices.

According to the Global Trade Research Initiative (GTRI), steel imports account for only 6% of India’s steel demand, with over 70% of these imports made by large steel firms. A Significant share of the total imports comprises steel scrap and semi-finished products, which are critical to the domestic production of particularly the automotive and construction sectors.

The DGTR will consult for opinion all relevant stakeholders before making a final recommendation, leaving the Finance Ministry with the ultimate say-so regarding safeguard duties.