India May Impose 15%-25% Tax on Chinese Steel Imports to Safeguard Local Manufacturers
India is considering imposing a temporary tax, ranging from 15% to 25%, on steel imports from China within the next six months. This move comes in response to a surge in cheap Chinese steel flooding the Indian market, which has caused significant strain on local producers.
Steel Minister H.D. Kumaraswamy emphasized that rising imports of Chinese steel, often facilitated by unfair trade practices, are posing a serious challenge to India’s domestic steel manufacturers. “The government is resolute in its commitment to protecting the Indian steel industry,” Kumaraswamy said in an interview with Reuters. To address the situation, India began an investigation in December to determine whether imposing a safeguard duty, which could remain in place for up to two years, would be necessary to curb the growing imports. If adopted, this tax would aim to level the playing field for local manufacturers.
India became a net importer of finished steel in the fiscal year ending March 2024, with imports from China reaching record highs between April and December. Despite strong local demand due to rapid economic growth and rising infrastructure projects, the influx of cheap Chinese steel has caused domestic prices to slump. As a result, several smaller Indian steel mills have been forced to scale back operations, and some are considering job cuts. This situation is compounded by global trade tensions, such as the U.S. steel tariffs under former President Donald Trump, which have led exporters to seek new markets, including India. Industry experts warn that this trend could put additional pressure on domestic prices, further hurting Indian steelmakers.
In response to these challenges, India is exploring new markets for its steel, particularly in Africa, the Middle East, and Southeast Asia. At the same time, domestic steel manufacturers are focusing on producing high-value, specialized steel, which is less susceptible to competition from China. Furthermore, the Indian government is working to diversify sources for steel-making raw materials, including coking coal, with increased imports from countries such as the U.S., Russia, and Mozambique, alongside traditional suppliers like Australia. To future-proof the Indian steel industry, Kumaraswamy also outlined plans to launch a production-linked incentive (PLI) program aimed at promoting low-carbon steel production. The transition to green steel will require an estimated investment of $20-25 billion, with funding potentially coming from green bonds, concessional financing, and public-private partnerships.
