Proposed Safeguard Duty on Steel Imports

Proposed Safeguard Duty on Steel Imports

Sub: Eco

Sec: External sector

Context and Background:

Proposed Safeguard Duty: The Directorate General of Trade Remedies (DGTR) initiated an investigation into steel imports, targeting “Non-Alloy and Alloy Steel Flat Products.”

Objective: To address concerns raised by domestic players about a significant increase in imports affecting local industry competitiveness.

Stakeholders: Key players filed applications under the Customs Tariff Act, 1975, seeking the safeguard duty.

GTRI’s Critique of the Probe

The Global Trade Research Initiative (GTRI) identified technical flaws in the safeguard investigation:

• Minimal Import Surges: Focus on products with negligible import growth.
• Inappropriate Tools: Misapplication of global safeguard principles.

Industry Concerns and Opposition

• MSME Engineering Sector:
  • Additional duties could make domestic products uncompetitive globally.
  • Challenges: Liquidity constraints and high domestic steel prices.
• Emphasized the adverse impact on exports and the broader economy.

Steel Industry Data (2019-20 to 2023-24)

• Crude Steel Production: Increased from 109.14 MT to 144.04 MT.
• Consumption: Rose from 100.17 MT to 136.25 MT.
• Import Dependency:
  • FY24: India met 94% of steel demand domestically, with imports accounting for only 6%.

Global Perspective

• Excess Capacity: Nations like China, Japan, and South Korea face surplus due to slowing demand, leading to increased exports.
• Trade Agreements:
  • Most imports are from FTA partners or China.
  • GTRI recommends FTA-specific safeguards and anti-dumping measures targeting China.

Safeguard Measures Defined

• Aim to provide a level-playing field for domestic players in case of a sudden surge in imports.

Safeguard Measures under WTO:

• Anti-Dumping Duty: Imposed when a foreign company exports a product at a price lower than its home market value, to protect local industries from unfair competition.
• Countervailing Duty: Imposed to counteract subsidies given by foreign governments to their exporters, which distort trade.
• Quotas: Limits the quantity of a particular product that can be imported during a set period.
• Tariffs: Taxes on imported goods to protect domestic industries or raise revenue.