This move, though protective in intent, carries both potential benefits and challenges. On the positive side, the safeguard duty seeks to provide a necessary buffer for domestic steel manufacturers, enabling them to compete effectively against lower-priced imports. It is anticipated that this measure will enhance local steel production and employment opportunities within India, aligning with the objectives of the government’s National Steel Policy, which targets a production capacity of 300 million tonnes (MT) by 2030.

Conversely, critics point to the downside of increased costs for industries reliant on steel imports, which could lead to inflationary pressures as businesses pass these additional costs onto consumers. Organizations such as J.P. Morgan Research have indicated that such tariffs may contribute to broader inflationary trends, affecting consumer prices and overall economic stability.

Additionally, India’s tariff could trigger retaliatory trade actions from affected countries, potentially disrupting export markets for Indian manufacturers. This aspect is especially pertinent as imports from countries with Free Trade Agreements (FTAs) represented 51% of India’s steel imports in 2024, highlighting how broadly this duty will be felt internationally.

The backdrop to these tariff measures is the robust performance of India’s steel industry in the fiscal year 2024-2025, where crude steel production capacity expanded by 10% year-on-year to 205 MT. Production itself grew by approximately 6%, reaching 152 MT, with domestic steel consumption rising by 11.3%, reflecting healthy industrial demand across sectors such as infrastructure, automotive, and general engineering.

Despite the industry’s resilience, Indian steel producers have faced substantial pressure due to the continuous inflow of cheaper steel imports, particularly from China, which accounted for around 30% of total imports. The imposition of the safeguard duty, therefore, becomes critical in balancing the competitive landscape.

On the global stage, the steel market dynamics have presented a mixed scenario. Declining demand and production levels in China have affected global trade flows, creating an environment where protectionist measures become appealing to safeguard local interests.

Looking forward, the safeguard duty combined with other nontariff barriers, such as mandatory BIS certification and the Steel Import Monitoring Scheme (SIMS), is likely to fortify the position of domestic steel producers. However, careful monitoring will be necessary to mitigate potential adverse economic impacts and international trade repercussions.

Ultimately, these regulatory interventions are anticipated to positively influence domestic steel utilization rates, projected to hit a decadal high of 88% capacity utilization in FY25. As India moves towards achieving higher self-sufficiency and sustained industry growth, strategic management of these tariffs and proactive engagement with international trade partners will remain essential.