Safeguard duty of 12% on steel may halt imports, hit MSMEs, says GTRI

Business Standard

22-04-2025

"These policies go against the spirit of Make in India. MSMEs drive 33 per cent of manufacturing output, but rising input costs and limited supply may push many out of business," GTRI founder said
Press Trust of India New Delhi
Imposition of 12 per cent safeguard duty on five steel product categories may halt their imports and force importers to buy these goods from domestic players, who are likely to raise prices following the levy, think tank GTRI said on Tuesday.
It said since Indian producers can not meet demand for specialised steels like abrasion-resistant plates, imports are essential but the new safeguard duty could raise input costs by 8-10 per cent, just like the recent hikes by local steel mills.
The Global Trade Research Initiative (GTRI) said that "12 per cent safeguard duties with high threshold values, is expected to halt most imports, effectively forcing buyers to shift to domestic suppliers. Indian steel companies are likely to exploit this policy to raise prices further, a trend already evident with an 8-10 per cent price increase seen in recent months following news of the safeguard proposal." It raised concerns that the DGTR (Directorate General of Trade Remedies) recommended these duties without verifying claims of industry injury, even though domestic steel production has grown by 19 per cent and capacity utilisation is high (83.90 per cent).
"These policies go against the spirit of Make in India. MSMEs drive 33 per cent of manufacturing output, but rising input costs and limited supply may push many out of business," GTRI Founder Ajay Srivastava said.
"We always forget, that local production is not adequate to meet demand for specialised steel and imports are a necessity for large number of steel types. This only helps local large steel makers to raise domestic price hurting GDP and exports," he added.
The safeguard duty, along with arbitrary Quality Control Orders (QCOs), could severely harm India's MSME-driven downstream industries, it said.
Meanwhile, big players benefit from special exemptions such as met coke import quotas and this unfair system weakens MSME competitiveness and risks shutting down many firms, it added.
"MSMEs already struggle with monopolistic practices, high minimum order quantities, and long delays in getting supplier approvals, making them rely heavily on expensive domestic steel," it said.
The government has imposed a 12 per cent safeguard duty on five categories of imported steel products. For each product, a threshold import value has been notified. If imports arrive at a value lower than the threshold, the duty becomes applicable.
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