Safeguard duties on steel coil imports could hurt small rolling mills: GTRI report

India’s large steel producers’ demand for imposition of safeguard duties on import of hot rolled (HR) and cold rolled (CR) steel coil, being examined by the government, could significantly impact over 10,000 small rolling mills that depend on affordable imports to stay competitive, according to an analysis carried out by research body Global Trade and Research Initiative (GTRI).

“Such a move (imposition of safeguard duties) could shift the rolling business from small rolling mills to large steel firms, offering little benefit to India’s overall steel production,” the report pointed out.

The Steel Ministry recently made a request to the Commerce department to examine the possible imposition of safeguard duties on HR and CR steel, Commerce Secretary, Sunil Barthwal, told reporters earlier in the week. A decision on the matter can only be taken after an investigation of the matter by the Directorate General of Trade Remedies (DGTR), which is being carried out, he said.

Downstream industry needs

“The DGTR will look at the whole value chain. We are looking at not only HR coil or CR coil that may be coming to India. We are also looking at the requirement of the downstream industry, whether there is production imbalance or whether the injury is because of excess capacity in steel,” Barthwal said.

Safeguard measures restrict imports of a product temporarily through measures such as higher duties, if a domestic industry is seriously injured or threatened with serious injury due to a surge in imports.

Apart from being harsh on the small players, the issue has broader economic implications, the report said. “HR and CR coils are critical inputs for downstream industries, including automobile and appliance manufacturing, which depend on low-cost materials to maintain global competitiveness. Higher coil prices, driven by safeguard duties, could weaken these industries, reducing exports and harming the overall economy,” it said.

Steel imports

India’s steel production data further complicates the picture, the study noted. In FY24, India produced 139.15 million tonnes (mt) of steel, exported 7.5 mt, and consumed 136.29 mt, according to government data. This left little room for surplus, making imports necessary to meet domestic demand, the study explained. 

Steel imports account for only 6 per cent of domestic production. Over 70 per cent of these imports cater to large steel firms, with 50 per cent being raw materials like steel scrap and 40 per cent specialised products unavailable locally, it said.

“The proposed safeguard duties could exacerbate these disparities, further tilting the scales in favour of large firms. By increasing prices for HR and CR coils, these measures threaten the viability of small rolling mills and reduce the competitiveness of downstream industries,” the report said.

India already faces a steel shortage, and imports are essential to fill the gap. Restricting imports of HR and CR coils would only add to the challenges faced by the broader steel ecosystem, it added.