Events and Updates

Title: Steel imports: DGTR against safeguard duty reimposition

Posted on: 14th August 2019

Safeguard duty is generally imposed in the event of a sudden surge in imports which causes or threatens to cause serious injury to the domestic industry.


The Directorate General of Trade Remedies (DGTR) is learnt to be not inclined to accede to the steel industry’s demand for re-imposition of safeguard duty on imports of various hot-rolled coil (HRC) products and sheets, as it reckons the conditions for such a remedial step don’t exist right now.


The safeguard duty, imposed in March 2016, had expired in phases between March and May, 2019. While the duty on coils was initially 20% of the landed value, that on sheets and plates was 8% ad valorem, minus anti-dumping duty payable.


“The DGTR is not convinced with the industry data and is unlikely to reimpose safeguard duty since the prevailing situation of the domestic industry is not as same as in 2016, when the government had to initiate a series of measures to rein in rising predatory imports,” said a source, on condition of anonymity.


The domestic steel industry had in February sought for a safeguard duty of 25% ad valorem on a wide range of products in order to “curtail cross-dumping of products” in Indian market by a host of countries such as Indonesia and Russia after the US and EU set up tariff and quota barriers.


Safeguard duty is generally imposed in the event of a sudden surge in imports which causes or threatens to cause serious injury to the domestic industry. “Imports have to be sudden, sharp and significant enough. It is a temporary, product-specific measure and applied to all imports irrespective of the source,” the source added.


As per data compiled by Joint Plan Committee, a unit under the steel ministry, India’s steel imports have actually declined 6% to 2.45 million tonne (MT) during the April-July period of the current fiscal from the corresponding period a year earlier.


Industry sources, however, said reintroduction of the safeguard duty was a must as a barrier to check imports since India has become all the more vulnerable now to predatory imports thanks to trade barriers in place across the world. If India does not protect its domestic industry, steel will continue to be diverted to the country, they contend.


“FTA (free trade area) countries comprised 66% of the total imports into India during the first quarter of the current fiscal. It was 58% in the whole of 2018-19. Unless we check imports particularly from these countries, it will be difficult for the domestic steel industry to make progress,” a steel industry source said.


India became a net importer of steel in 2018-19 after a gap of three years. As imports to India were surging, the government had imposed a series of tariff and non-tariff measures to successfully arrest the trend. Most of the barriers imposed then like minium import price (MIP), safeguard duty and anti-dumping duty have either expired or become redundant in view of the prevailing (high) international prices.


Meanwhile, local prices have started showing a downward trend of late due to anaemic demand from construction and auto industries, the two prime drivers of steel consumption.


Domestic prices for HRC decreased by 7.64% or Rs 3,968 per tonne to stand at Rs 47,963 a tonne in June 2019 compared with March 2019. Industry had to resort to further price cuts subsequently.