Auto Industry Opposes Safeguard Duty on Steel Imports
The Indian auto industry has become the latest sector to oppose the proposed safeguard duty on steel imports, urging the government to reconsider the move. The Society of Indian Automobile Manufacturers (SIAM) has formally raised the issue with the Commerce Department, citing the potential negative impact on the automotive sector’s costs and global competitiveness.
SIAM has argued that while most steel used by auto manufacturers is sourced from domestic suppliers, there is a significant reliance on imports for certain grades of steel. These specific grades, crucial for vehicle manufacturing, are not yet produced locally, and there is uncertainty about when Indian mills will be able to supply them. According to SIAM, this limited amount of imported steel is vital for the production of high-quality vehicles in India. Steel manufacturers, including JSW Steel, have been advocating for the imposition of safeguard duties, claiming that Chinese steel is being “dumped” into India through Free Trade Agreements (FTAs) with countries like Korea, Japan, and Vietnam. The domestic steelmakers argue that the import of cheaper foreign steel is adversely affecting the market, leading to calls for a safeguard duty ranging between 20% and 25%.
Despite this, SIAM contends that more than 80% of the steel used by the Indian auto industry is domestically sourced, and the reliance on imports is limited to specific grades that are not yet available locally. While the auto sector is committed to increasing localisation and engaging with domestic steel producers to meet the required specifications, SIAM highlighted that this would require significant investment and a clear timeline. The proposed duty has drawn objections from various industries, including auto manufacturers, who warn that the move could drive up the cost of vehicles, making them less affordable for consumers. Furthermore, they argue that such a levy could make Indian exports less competitive in an already challenging global market.
The Directorate General of Trade Remedies (DGTR) has launched a probe into the matter, but the auto industry is calling for a careful review of the potential ramifications. With local production timelines still uncertain and import dependency persisting for some steel grades, the sector urges the government to find a balanced approach that supports both domestic steel production and the competitiveness of India’s auto industry.
