Trade aggression: India's steel shield mustn't turn into a slippery slope

Mint

23-04-2025

Fears of surplus production overseas being dumped in India, especially by Chinese manufacturers, have spiked amid the ongoing tariff war. On Monday, India's ministry of finance notified a safeguard duty of 12% for 200 days on five categories of steel imports if sold below specified dollar prices.
These include hot rolled coils, sheets and plates; hot rolled plate mill plates; cold rolled coils and sheets; metallic coated steel coils and sheets; and colour coated coils and sheets. This follows the preliminary findings of a probe by the Directorate General of Trade Remedies (DGTR), which had noted a 'recent, sudden, sharp and significant increase in imports" of these goods, putting
domestic producers
at the threat of 'serious injury."
Government data shows that our steel imports rose to 9.5 million tonnes in 2024-25 from 8.3 million tonnes the previous year. Shipments from South Korea, Japan and other countries have been under the DGTR scanner, but particularly imports from China, whose economic slowdown has led to a steel glut.
As dumping is an unfair trade practice that hurts local businesses, anti-dumping levies are allowed under World Trade Organization (WTO) rules, so long as they're proportionate, temporary and based on evidence. Even without WTO caveats, this device must always be used judiciously. After all, if duties are raised on industrial inputs, user industries could suffer higher costs; if levied on finished goods, consumers may end up paying more.
As there is often a thin line between safeguard duties and outright protectionism, all stakeholders within the country and abroad should have clarity on the rationale employed. In the case of steel products, the Centre's notice refers to a DGTR report of 18 March that lays out trends on excess capacity overseas and a surge in our import volumes, along with indexed data on how prices were undercut.
To establish injury, it shows how indexed local profits and employment took big hits. It has other supportive numbers too. In fact, the 93-page document seems overloaded with tabulations. Ideally, in such cases, the government should also offer an executive summary to explain why the action was taken. This would keep the scope for doubt minimal.
Price information is key. A sudden drop in import prices is a telltale sign of wares being dumped. Deep-discount sales can also be inferred from a comparison of prices charged by producers in their home markets and here. Clinching evidence that satisfies the textbook definition of below-cost dumping would require the actual production costs of foreign exporters, but these are difficult to obtain and Chinese data would be clouded by subsidies doled out by the state—a reason it's blamed for warping fair trade.
The shield erected in defence of Indian steelmakers not only appears WTO-compliant, it is in line with actions taken by many other nations. A clearer enunciation of its logic, however, would deter dubious demands from sundry other industries that may want to be shielded from global competition. While business lobbies can hardly be blamed for trying, safeguard duties levied on flimsy grounds would push up costs all around. Several quality control orders issued by the Centre are already suspected of acting as non-tariff barriers.
New hurdles raised across the economy for imports would leave us with a higher cost base, which would deal a blow to our global competitiveness. All said, we must take care that a shield for steel doesn't turn into a slippery slope.