In April 2025, the Indian government imposed a 12% safeguard duty on specific steel imports for a period of 200 days. This measure came amid rising concerns over a sudden spike in low-cost steel inflows, particularly from countries like China, South Korea, and Japan. The move, based on recommendations from the Directorate General of Trade Remedies (DGTR), aims to shield domestic producers from potential injury caused by unfair pricing. The announcement triggered immediate market reactions, with metal stocks witnessing a positive rally. While the duty is temporary, its impact is expected to ripple across trade, production, and investment decisions within the Indian steel sector. This article explores the reasons behind the tariff, its implementation, and the broader implications for industry stakeholders.
Overview of the 12% steel import duty
India recently imposed a 12% safeguard duty on specific steel imports to protect the domestic market from a sudden surge in cheaper international steel. The duty is applicable on flat products of non-alloy and alloy steel that are commonly imported in large volumes. This move came after a recommendation by the Directorate General of Trade Remedies (DGTR), citing injury to local producers. It will be in effect for 200 days starting from April 2025. The main reason behind this decision was a sharp increase in imports from countries like China, Japan, and South Korea, which were selling steel at low rates, making it tough for Indian steel manufacturers to compete. The surge in imports had created a pricing imbalance, impacting profit margins across the Indian steel ecosystem. The government expects this temporary safeguard to stabilise the sector and allow domestic manufacturers time to recover.
Details of the tariff implementation
The 12% safeguard duty came into effect from April 21, 2025, and is set to remain for 200 days. The tariff specifically targets imports of hot-rolled and cold-rolled flat products, both alloy and non-alloy types. The duty does not cover steel imports priced above a pre-specified minimum import price, which are considered premium or specialised. The imposition followed a preliminary investigation by the DGTR that identified a significant rise in imports from East Asian countries, primarily China, Korea, and Japan. These countries were exporting steel at low prices, leading to injury claims from Indian producers. The DGTR found evidence that supported temporary protection under WTO norms. Importers will be required to pay the duty upfront at Indian ports, increasing the landed cost of foreign steel. This regulation is part of the government’s trade remedy framework aimed at ensuring fair competition in the local market.
Duration and scope of the duty
The duty is valid for 200 days from April 21, 2025, and applies only to certain steel categories that saw high import growth in the last fiscal year. The DGTR's report found that flat steel products had recorded an over 60% rise in import volumes from April 2023 to March 2024. This triggered a legal threshold for safeguard action. The 12% duty will cover all imports below the designated floor price, ensuring the measure only affects bulk, competitively priced steel. Products from developing countries that export less than 3% of total steel to India individually may be exempt. However, countries that export as part of a group exceeding 9% collectively are included. Exemptions will be reviewed periodically. The temporary nature of the duty is in line with WTO guidelines and may be followed by a more permanent decision depending on the injury assessment report.
Impact on Indian metal stocks
The announcement of the 12% safeguard duty caused a positive rally in Indian metal stocks. This was driven by investor optimism that domestic companies would benefit from reduced competition and stabilised prices. Soon after the notification, key steel stocks like Tata Steel, JSW Steel, and SAIL saw price hikes between 2% and 3% on the BSE and NSE indices. The market responded with confidence, interpreting the move as a proactive step toward protecting India's core industries. Metal stocks across mid-cap and small-cap segments also gained. This upswing was further supported by the view that reduced imports would lead to higher capacity utilisation and better operating margins. Analysts believe the positive sentiment could extend over the medium term as more demand is expected to be routed to domestic steelmakers. The broader Nifty Metal index gained notably, indicating sector-wide enthusiasm.
Performance of major steel companies
Following the imposition of the duty, major steel companies experienced a noticeable uptick in stock prices. Tata Steel gained over 2%, while JSW Steel and SAIL recorded increases of nearly 3% each. These gains reflect market optimism about improved domestic sales and stronger pricing power. Companies like Jindal Steel & Power and Hindalco also saw marginal increases. JSW Steel welcomed the move, stating that it aligned with the goal of a fair and competitive marketplace. Higher domestic demand and improved margins could result in increased profitability over the next few quarters. Tata Steel also indicated that the decision would support investment in capacity expansion. Analysts expect a positive ripple effect across supply chains, with higher capacity utilisation, reduced inventory pressures, and better order inflow. The policy support gives Indian producers an advantage to capture more domestic market share in the near term.
Market indices response
The equity markets welcomed the safeguard duty, with key metal indices reflecting positive investor sentiment. The Nifty Metal index rose by over 2%, led by frontline steel stocks. On the BSE, the metal segment outperformed broader indices like the Sensex and Nifty50, which traded flat during the same session. Investors believe the government’s move sends a strong signal about its intent to protect domestic industries and ensure sustainable competition. The policy boost has not only improved sentiment in the steel sector but also improved expectations in allied industries like mining and infrastructure. Market experts also highlight that the reduced risk of price undercutting from foreign players makes Indian steel companies more attractive to institutional investors. With government capex continuing in roads, railways, and housing, the higher demand visibility further supports bullish momentum across metal-related indices.
Reactions from industry leaders
Industry leaders have largely welcomed the safeguard duty as a protective and strategic step. They believe the decision supports fair play in a market that was being distorted by cheaper imports. The Indian Steel Association (ISA) noted that the government’s response was timely and would give the domestic industry breathing space to stabilise prices and plan for growth. Company executives echoed similar sentiments. The move has also helped to restore industry confidence amid global overcapacity and price volatility. Industry bodies stressed that the safeguard duty is compliant with international trade laws and does not amount to protectionism. It simply counters the injury caused by sudden import surges. Smaller manufacturers have also stated that the measure would help revive their operations and protect jobs in Tier-2 and Tier-3 cities. The steel industry views this move as a stabilising force amid turbulent global conditions.
Statements from Tata Steel and JSW Steel
Tata Steel responded positively, stating that the duty would help create a level playing field in the Indian steel market. The company noted that while it supports free trade, such safeguards are necessary when market distortions threaten long-term growth and profitability. Tata Steel executives mentioned that the duty aligns with the company’s expansion strategy and investment in newer product lines. JSW Steel, on the other hand, highlighted that the duty will allow Indian steelmakers to operate at better margins. JSW’s leadership commented that their plants were facing pressure from low-priced imports, particularly from China and South Korea. Both companies appreciated the government’s proactive stance and assured stakeholders of increased focus on quality, delivery, and innovation. These remarks reinforced investor faith in India's top steelmakers and their ability to capitalise on the changing market dynamics.
Government's perspective
The Indian government clarified that the 12% safeguard duty is not a protectionist tool but a temporary measure to ensure fair trade practices. Officials from the Ministry of Commerce noted that the decision followed WTO guidelines and a thorough investigation by the DGTR. The government observed that import volumes had increased disproportionately and were harming domestic producers. The aim is to give Indian manufacturers time to adjust to changing market conditions without being overwhelmed by underpriced imports. The DGTR will continue monitoring the situation and may extend or modify the duty if needed. The government also indicated that the decision supports the broader goal of “Atmanirbhar Bharat” by reducing overdependence on foreign steel. Officials confirmed that safeguards of this nature have been used by several other countries, including the US and EU, to protect key sectors from injury.
Conclusion
The 12% safeguard duty marks a strategic intervention by the Indian government to stabilise the domestic steel industry. With increasing pressure from low-priced imports, especially from East Asia, the measure provides much-needed relief to local manufacturers while ensuring compliance with WTO trade norms. Early market reactions indicate strong investor confidence in the policy’s effectiveness, as evidenced by gains across major metal stocks. Industry leaders have welcomed the decision, viewing it as a temporary but necessary step to restore balance. Going forward, the DGTR’s ongoing assessments will determine whether the safeguard continues or transitions into a more permanent framework. As India pursues self-reliance in core industries, this move sets a precedent for responsive, fair, and strategic trade governance.
