Metal Stocks In Focus: Govt Evaluates Safeguard Duty On Steel Imports To Support Domestic Players

The government is currently considering the implementation of a safeguard duty on steel imports, which has been a topic of intense discussion among officials and industry stakeholders. The domestic steel sector has advocated for a duty of up to 25% to mitigate the challenges posed by inexpensive imports, particularly from nations that have Free Trade Agreement (FTA) partnerships with India. However, there has yet to be a conclusive decision on this matter. This was highlighted during a high-level meeting led by Commerce and Industry Minister Piyush Goyal on Tuesday, as reported by industry sources to CNBC-TV18.

Despite the push for protective measures, the Directorate General of Trade Remedies (DGTR) is tasked with conducting a comprehensive assessment. This investigation aims to examine the disparities in production and the potential financial setbacks Indian steel manufacturers might be facing. Based on these findings, the DGTR will then advise on any protective steps that should be taken.

Steel imports from FTA countries, which represent over 60% of India's total steel imports, currently enjoy the advantage of zero-duty access. Sandeep Poundrik, the Steel Secretary, stated last month that these countries would continue to be exempt from any duty increases. This exemption has sparked a debate within the industry, with several leaders expressing concerns over the competitive disadvantage caused by subsidized steel exports from countries like China, Japan, Korea, and Vietnam.

Echoing the sentiment, Sajjan Jindal, Chairman & Managing Director of JSW Group, highlighted the historical context of China’s steel industry protections in a conversation with CNBC-TV18. He pointed out the influx of Chinese steel into India through countries like Japan, Korea, Vietnam, and Malaysia with 0% duty, emphasizing the disparity in the competitive landscape.

Naveen Jindal, CMD of JSPL, also voiced his concerns in September, drawing parallels with the protective measures adopted by the USA and Canada, which have introduced a 25% duty on steel imports. He stressed the importance of shielding the domestic industry from unfair competition from certain countries. Jindal emphasized the need for equitable competition to foster investment in growth and decarbonization efforts, noting the detrimental impact of unrealistically priced subsidized exports on the Indian industry.

In reassurance to the industry, Steel Minister HD Kumaraswamy spoke to CNBC-TV18, indicating that the government is actively working on addressing the situation. "We will sort it out, the process is going on," he stated, suggesting that a resolution could be on the horizon.

As discussions continue and the government deliberates on the best course of action, the decision on imposing a safeguard duty on steel imports remains pending. The move aims to provide the Indian steel industry with the necessary protection against low-cost imports, ensuring fair competition and fostering the sector's growth and sustainability.