The Indian government has proposed a provisional 12% safeguard duty on select steel imports for 200 days, aiming to protect the domestic steel industry from a surge of cheap imports threatening its viability.

The Directorate General of Trade Remedies (DGTR) recommended the measure on Tuesday, citing “serious injury” to local producers from a “recent, sudden, and sharp” influx, particularly of flat steel products like hot-rolled coils and coated steel. The duty targets imports from nations including China and Vietnam, though certain developing countries are exempt.

India’s steel imports soared 41.3% to 4.7 million tonnes between April and September 2024, with China contributing 31% (1.46 million tonnes), per government data.

This spike, fueled by global overcapacity and trade diversions after U.S. and EU tariffs, has slashed domestic prices to a four-year low, pressuring giants like Tata Steel and JSW Steel. The DGTR noted that China’s shift to flat steel exports—amid a real estate slump—has flooded markets, echoing concerns from the Indian Steel Association, which sought a 25% duty.

The provisional duty, effective pending a final probe, sets import price thresholds (e.g., $675/tonne for hot-rolled coils) above which no tax applies, balancing protection with downstream industry needs. Steel stocks rose 2-5% on March 19, reflecting market optimism, though posts on X suggest domestic prices already exceed import parity by 7-8%.

Critics, including MSMEs, warn of cost hikes for 8 lakh small units, but Steel Minister H.D. Kumaraswamy defends the move, calling it vital for a “self-reliant India.”

While the 200-day measure offers short-term relief, experts question its impact, given 62% of imports enter duty-free via FTAs with Japan and South Korea. A permanent solution awaits the DGTR’s final ruling, as India navigates global trade dynamics and domestic demand.