The recent proposal to impose a 25% safeguard duty on steel imports has faced strong opposition from industries in Punjab, with several stakeholders warning of severe consequences for the broader economy and key sectors such as construction, automotive, and manufacturing. The proposal, put forward by the Union Minister for Steel, is viewed by many as a potentially damaging policy for small and medium enterprises (SMEs) and micro, small, and medium enterprises (MSMEs), which are integral to India’s industrial landscape.
Upkar Singh, president of the Chandigarh Industries and Commerce Union (CICU), along with other industrial leaders, voiced their concerns that such a policy would drive up production costs across industries that rely heavily on steel as a critical raw material. Industries like construction, automotive, and manufacturing, which already grapple with thin margins, would face higher costs, making their products less competitive in both domestic and international markets. The heightened steel prices would further complicate the viability of infrastructure projects, already under strain due to rising costs and budget overruns. One of the core issues highlighted by the industry is that the safeguard duty could reduce competition in the domestic market, as high import duties would make foreign steel less affordable. This lack of competition could allow domestic producers to raise their prices without fear of market discipline, leading to inefficiencies in the sector and ultimately higher costs for end-users.
In addition to rising production costs, the industry has expressed concerns about the negative impact on India’s ambitious infrastructure plans. The increase in steel prices could delay vital infrastructure projects, hampering economic progress. The industry has also warned that job losses would increase as businesses struggle with higher operating costs, and inflation could rise as a result of more expensive goods in the market. Furthermore, critics argue that the imposition of such a high safeguard duty contradicts the government’s ‘Make in India’ initiative, which aims to establish India as a global manufacturing hub. Competitive steel pricing is essential to attract foreign investment and support domestic manufacturing, yet this duty could make Indian products more expensive and less competitive internationally. There are also concerns about the potential for retaliatory measures from trading partners, which could negatively impact India’s export opportunities.
The proposal to impose a safeguard duty is thus not only seen as a hindrance to domestic industries but also as a potential obstacle to India’s economic growth and global competitiveness. Industry leaders are calling on the government to reconsider the measure and explore more balanced approaches to protecting the domestic steel sector without stifling broader industrial progress.
