The Indian Steel Ministry has proposed to increase the basic customs duty on imported finished steel products from 7.5% to 15%. This proposal, as part of the submissions for the Union Budget 2025-26, is aimed at mitigating the adverse impact of low-cost imports, particularly from China, on domestic producers.
According to the government's analysis, the price of steel imported from China remains below domestic steel prices in India despite the current 7.5% customs duty. Increasing the tariff to 15% is critical to provide a level playing field for local producers, the ministry said. However, officials emphasize that even at 12.5%, imported steel will retain its competitive advantage and stronger measures are needed.
The Ministry of Steel has also requested the Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce to expand its investigation into the increase in imports of certain flat steel products. Last month, the ministry had suggested a safeguard duty of 25% for a period of two years on flat steel products. While the safeguard duty is considered a short-term solution, the customs duty hike is being considered as a longer-term strategy.
The surge in low-cost steel imports has also reverberated in the global market. Many countries have taken safeguard measures to restrict steel imports from China. India’s proposed duty hike is in line with these international trends and aims to protect the competitiveness of the domestic industry.
The Finance Ministry is currently evaluating the proposal. The final decision is expected to be announced in February 2025 when the Union Budget 2025-26 is announced. If the proposal is accepted, higher import duties and potential safeguard measures could reshape the dynamics of the Indian steel market and significantly boost domestic manufacturing.
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