Safeguard duty boosts pricing power of Indian steel makers

US tariffs don't hit units as local demand is buoyant

- SURYA SARATHI RAY

THE IMPOSITION OF safeguard duty on steel imports in April has reined in inward shipments of the alloy rather suddenly, and enhanced the pricing powers of the domestic primary steel-makers.

However, this has the adverse fallout of raising the raw material costs of downstream players, and assorted industries that use steel as a vital production input. Since domestic inflation is currently subdued, the steel makers haven't come under any great pressure as yet to bring down the prices.

The government imposed a 12% safeguard duty on steel products on April 1 for 200 days, primarily to rein in rising imports that increased 15% year-on-year to 9.5 million tonne (MT) in FY25. An apprehension over a high influx of steel from China, Korea and elsewhere, following the imposition of a 25% import duty by the Trump administration, which took effect on March 10, may also have prompted the government to take the measure.

Subsequently, the Trump administration raised the import duty to 50% effective June 4. Although India didn't tweak the rate with this in view, there has been industry representation to double the safeguard duty to 24%.

Meanwhile, India has notified the WTO of its intention to retaliate against the US steel tariff. Washington has raised the dubious argument that the duty was imposed for national security reasons to avert adverse ruling by the WTO.