Commerce department examining steel ministry request on safeguard duty

The commerce department is taking a close look at the steel ministry’s request to impose safeguard duty on certain steel products to tackle a sudden sharp rise in the import of the alloy from China, South Korea, Vietnam, and Japan, among other nations. 

Safeguard duty is a temporary tariff barrier imposed by a country to protect its domestic industry from surge in imports. However, any such duty may raise steel prices, hurting the micro, small and medium enterprises (MSME) sector, a point also being considered by the department, a senior government official said. 

The Directorate General of Trade Remedies (DGTR), which comes under the administrative control of the commerce department, has sought relevant data from the steel ministry to get a clear picture of the situation. “We are examining the matter. The MSME sector also has their concerns. DGTR is looking into it. We have asked for data from the steel ministry,” the official told Business Standard.

  Last month, the steel ministry had urged the commerce department to levy 25 per cent safeguard duty on the entire flat steel product value chain for a two-year period. Flat steel products are typically used by construction, automotive, and electrical industries.

  According to the ministry, there has been a sharp rise in the inbound shipment of flat steel products over the previous two financial years. Besides, a fall in the average import price of such products has impacted the profitability of steel companies. Imposition of safeguard duty can not only protect the domestic industry from cheap imports but also boost capacity expansion, which is crucial for decarbonising the sector. That apart, steelmakers fear that there could be a rise in cheap imports from China due to various trade actions taken against the country.

  However, engineering exporters have raised concerns regarding the proposed safeguard duty on steel imports, warning that such a move could escalate steel prices in the domestic market and render engineering exports uncompetitive in global markets.

  Engineering Export Promotion Council of India (EEPC) Chairman Pankaj Chadha said that steel constitutes neaarly 60 per cent of the cost of production for most engineering products. Consequently, any fluctuation in prices of steel, or its availability, creates a ripple effect, disrupting exports  and undermining their ability to compete internationally. 

EEPC will soon meet commerce department officials to explain the concerns of the user industry. According to Chadha, if required, appropriate support should be extended to domestic steel producers through targeted measures rather than imposing safeguard duties that could have wider repercussions.