GTRI Calls for In-Depth Assessment of Steel Industry
The Global Trade Research Initiative (GTRI) has called for a thorough evaluation of the Indian steel industry before any decisions are made regarding the imposition of a safeguard duty on steel imports. GTRI, an economic think tank, released a report on Thursday highlighting concerns about the current safeguard investigation being conducted by the Ministry of Commerce into the rise of imports of certain steel products. According to the GTRI, the ongoing investigation suffers from significant technical weaknesses, such as focusing on products with minimal import surges and the inappropriate application of global safeguard measures.
The think tank has emphasised the need for a comprehensive study on the state of the Indian steel industry. The assessment should address the potential effects of both existing and proposed import measures on the costs of steel, economic growth, and job creation. GTRI Founder, Ajay Srivastava, underscored that any new policy decisions must be made based on an informed understanding of these factors. “We urge the government to carry out a study to understand the real impact of these measures and only take action after a careful assessment,” Srivastava said. One of the key issues raised in the GTRI report pertains to the complexity and inefficiency of India’s current import system for steel products. The existing regulatory framework, which includes Quality Control Orders (QCO), Steel Import Monitoring System (SIMS), and No Objection Certificates (NOC), has been criticised as overly bureaucratic, causing unnecessary delays and difficulties for steel importers.
GTRI suggests that streamlining the process, perhaps through collaboration with international labs for quality control, would enhance efficiency and ease compliance. The Directorate General of Trade Remedies (DGTR) initiated its investigation last month into the alleged surge of imports of ‘Non-Alloy and Alloy Steel Flat Products’. These products are essential to numerous industries such as construction, automotive, and manufacturing. The investigation follows a petition by the Indian Steel Association, which includes major steel players like ArcelorMittal Nippon Steel, JSW Steel, and Jindal Steel & Power, seeking the imposition of safeguard duties.
However, small and medium enterprises (SMEs) in the engineering sector have voiced concerns over the proposed safeguard duties. They argue that additional duties would raise the cost of steel imports, making domestic products less competitive and threatening the viability of India’s engineering exports. S.C. Ralhan, Chairman of the Hand Tool Association, highlighted the challenges faced by MSME exporters, citing liquidity issues and the rising costs of steel in the domestic market. GTRI further noted that the current safeguard investigation risks being counterproductive. Since many steel imports come from Free Trade Agreement (FTA) partners or China, the think tank has recommended that any safeguard measures be tailored specifically to these countries through FTA-specific safeguards or anti-dumping measures. Applying broad global safeguard measures, the report warns, could lead to disputes at the World Trade Organization (WTO).
The safeguard duty is proposed for steel flat products, which play a crucial role in the Indian economy, being essential inputs for a wide array of sectors. The GTRI has urged the government to reconsider its approach, particularly given India’s strong steel production capacity. The country’s crude steel production has surged from 109.14 million tons in 2019-20 to an estimated 144.04 million tons in 2023-24, with consumption rising in tandem from 100.17 million tons to 136.25 million tons over the same period. In FY2024, India met 94% of its steel demand through domestic production, with imports accounting for only 6%. This highlights the country’s growing self-reliance in steel production and calls into question the need for further protectionist measures, as advocated by some industry players.
