Govt starts probe to decide steel import safeguard duty

India has initiated a probe to determine imposition of safeguard duty on imports of certain types of steel following demand for the same by JSW Steel, Essar Steel and SAIL to protect the domestic industry due to a surge in imports. The three players, representing 50 per cent of domestic production, had moved the Directorate General of Safeguards (DGS), for imposition of the levy on imports of hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more.

In August, then revenue secretary Shaktikanta Das had said the decision regarding <g data-gr-id="48">imposition</g> of a safeguard duty on import of steel will not be delayed if the DGS recommends it. Last <g data-gr-id="47">month</g> the government had hiked import duty on base metals, including iron and steel, by 2.5 per cent in a move aimed at helping domestic players battling cheap Chinese imports after the currency devaluation by China.

In the application to the DGS, the domestic players have sought imposition of the import-restrictive duty to protect the domestic producers against serious threat caused by the increased imports to India. “...prima facie, increased imports of product under consideration (PUC) have caused or are threatening to cause serious injury to the domestic producers of product under consideration and accordingly, it has been decided to initiate an investigation...,” the DGS said while issuing notice for the same.

The product is primarily imported from China, Korea, Japan and Russia. Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain timeframe to avert any damage to a country’s domestic industry from cheap imports. Imports increased to 33,79,360 tonnes in 2015-16 (annualised), from 12,92,099 tonnes in 2013-14. 

The percentage of import with respect to domestic production rose to 13 per cent, from 5 per cent during the period. On the other hand, the market share of domestic producers fell to 37 per cent 2015-16 (annualised), from 45 per cent in 2013-14.

As a result, the profitability of the domestic industry declined sharply in 2015-16. The DGS further 

said that domestic industry has requested for immediate imposition of safeguard measures for four years in their application. The industry has also requested for <g data-gr-id="50">imposition</g> of a provisional safeguard duty in view of a steep deterioration in performance of the domestic industry following increased imports of the product under consideration.

Earlier in June, the government had raised the duty on some long and flat steel products by 2.5 per cent. Import duty on flat steel products was increased to 10 per cent from the earlier 7.5 per cent while for long steel products, it was raised to 7.5 per cent from the previous 5 per cent.

In the same month, India imposed <g data-gr-id="35">anti-dumping</g> duty of up to $316 per tonne on imports of certain steel products from three countries, including China, to protect domestic producers from below-cost inbound shipments.