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India Wields the "Steel Tariff Shield": Three-Year Safeguard Duties Take Effect, Rebalancing Global Supply Chains and Domestic Industries

     Recently, the Indian Ministry of Finance officially announced the implementation of a three-year safeguard duty on certain imported steel products. This policy marks India's latest and most forceful trade measure to protect its strategic basic industries and respond to external competitive pressures. Its impact will ripple through the global steel trade landscape and India's domestic manufacturing ecosystem.

Policy Core: Phased Tariffs and a Precisely Designed Price Exemption Mechanism

     According to the announcement, this safeguard duty will be implemented in phases: a rate of 12% in the first year, decreasing to 11% in the second year, and further to 10% in the third year. This policy is not without basis; its direct context is an investigation launched by India's Directorate General of Trade Remedies (DGTR) in December 2024. The investigation revealed that India's imports of non-alloy and alloy steel flat products surged to 6.612 million tons during the review period, nearly tripling from 2.293 million tons in the 2021-22 fiscal year. The main source countries included China, Japan, South Korea, and Vietnam.

     Notably, the policy incorporates a crucial price-trigger exemption clause:

     •When the landed import price of hot-rolled coil (HRC) falls below $675 per ton, the safeguard duty will be exempted.

     •When the landed import price of cold-rolled coil (CRC) falls below $824 per ton, the same exemption applies.

     This sophisticated design reflects the dual objectives of the policy: while curbing low-priced dumping and creating a buffer for domestic steel mills (such as Tata Steel, JSW Steel, etc.), it also ensures that downstream users like the automotive, engineering machinery, and construction industries can still access raw materials at manageable costs, preventing domestic inflationary pressures from spiraling out of control. Currently, the domestic price of HRC in India has retreated from its April 2025 high (around ₹52,850 per ton) to approximately ₹46,000 per ton, even falling below the import parity price, reflecting persistent supply-side pressure in the market.

Underlying Motivations: An Industrial Defense Battle to Uphold the Ambition of a "Steel Power"

     This move by India is a critical part of its long-term industrial strategy. Having surpassed Japan in 2018 to become the world's second-largest crude steel producer, India has maintained this position for six consecutive years. Data from the World Steel Association shows that India's crude steel production reached 141 million tons in 2023, accounting for 7% of global output. The country has ambitious plans to increase its capacity to 205 million tons by 2025 and exceed the 300 million tons mark by 2030.

     However, surging imports—particularly cost-competitive products from East Asia—pose a direct threat to domestic capacity utilization and profit margins. Strong lobbying by the Indian Steel Association on behalf of major producers ultimately led to this tariff. Early measures have shown effectiveness: in May 2025, India's finished steel imports plummeted by 40.7% year-on-year to about 428,000 tons, and total imports for the first half of the 2025-26 fiscal year fell to 3.3 million tons, a decrease of 30% year-on-year. Despite this, India remains a net importer of steel, facing immense pressure for structural adjustment.

Impact Assessment: Global Ripples and Internal Dynamics

     This tariff policy is a double-edged sword, with complex and far-reaching implications:

     1.Impact on Global Exporters: Major exporting countries, especially China, need to reassess their export strategies to India. It is worth noting that India had previously imposed high anti-dumping duties on Chinese cold-rolled non-grain oriented electrical steel in September 2025 (e.g., $223.82 per ton for Baosteel Zhanjiang and others, and up to $414.92 per ton for other producers). When combined with the low-price exemption clause of the safeguard duty, it implies that if China's export price for HRC can stabilize below approximately $435 per ton, its market competitiveness could still be maintained, posing a subtle challenge to global pricing.

     2.Impact on Downstream Industries in India: Domestic steel-consuming sectors such as automotive, heavy machinery, and infrastructure have clearly expressed concerns. Rising raw material costs due to the tariffs could weaken their global export competitiveness. For instance, a medium-sized auto component manufacturer estimates that its production costs could increase by 5%-8%, putting it at a disadvantage in competitive international tenders.

     3.Long-term Implications for Global Supply Chains: India's action is another example of the rise of trade protectionism in basic industries globally. It may prompt other emerging economies to follow suit, thereby exacerbating the trend of regional fragmentation in the global steel market. Simultaneously, it forces exporting countries to accelerate their transition towards high-end, green steel products to avoid trade barriers on traditional products.

Forward Look: A Brief Respite and an Inevitable Transformation

     This three-year tariff window essentially provides India's domestic steel industry with a valuable strategic adjustment period. The government and the industry are expected to utilize the profits and breathing space gained during this interval to invest in technological upgrades, capacity consolidation, and the transition to green steelmaking (such as hydrogen-based direct reduction iron technology) to fundamentally enhance long-term competitiveness.

     For international traders and manufacturers, key strategies to adapt to this new trade reality will include closely monitoring changes in India's official price exemption thresholds, actively expanding high-value-added product lines, and considering capacity deployment within India or within tariff-union countries. The rules of global steel trade are being rewritten, and flexibility and foresight have never been more critical.