India Extends Anti-Subsidy Duty on Steel Imports from China and Vietnam

India’s Ministry of Finance has announced an extension of the anti-subsidy duty on welded steel pipes and tubes imported from China and Vietnam for another five years. This decision, first implemented in September 2019, aims to protect the domestic steel industry from unfair competition caused by subsidised imports.

What is an Anti-Subsidy Duty?

An anti-subsidy duty, also known as a countervailing duty, is a tariff imposed on imports that are believed to be subsidised by the government of the exporting country. These subsidies allow foreign manufacturers to sell products at artificially lower prices, undercutting domestic producers. The anti-subsidy duty is meant to level the playing field for domestic companies and prevent them from being pushed out of the market.

Why Was the Duty Extended?

The decision to extend the anti-subsidy duty was taken after several Indian industry associations raised concerns about steel imports from China and Vietnam. These associations argued that the steel products were being sold in India at prices lower than their production costs due to subsidies provided by the Chinese and Vietnamese governments. Such practices have been harming the growth of India’s steel sector, despite the country being the second-largest steel producer globally.

The Impact of Rising Imports

In recent years, India has seen a surge in steel imports from Southeast Asian countries, particularly from China, South Korea, Japan, and Vietnam. This has negatively impacted Indian steel manufacturers. Despite India being a major steel producer, the country became a net importer of steel in the fiscal year 2024, with a steel trade deficit of 1.1 million tonnes. During the April-July 2024 period, the deficit stood at 0.11 million tonnes.

Imports from China grew by 10% year-on-year in the first seven months of 2024, reaching $60 billion, while imports from Vietnam surged by 17% year-on-year, totaling $5.8 billion. These rising imports have hurt Indian companies, making it difficult for them to compete against the cheaper, subsidised products entering the market.

How Will Indian Steel Companies Benefit?

Major Indian steel producers such as Tata Steel Ltd., JSW Steel Ltd., Welspun Corp., and Ratnamani Metals & Tubes Ltd. are expected to benefit from the extension of the anti-subsidy duty. The higher tariffs on Chinese and Vietnamese imports will make these foreign products less competitive in the Indian market, allowing domestic manufacturers to increase their market share.

The move also protects Indian steel companies from practices like dumping, where foreign manufacturers sell their products below production costs to gain market share. With the anti-subsidy duty in place, Indian steel producers can sell their products at fair prices, promoting healthier competition within the domestic market.

Conclusion

India’s extension of the anti-subsidy duty on steel imports from China and Vietnam is a significant step toward supporting the domestic steel industry. By curbing the influx of cheaper, subsidised imports, the government is creating a fairer competitive environment for Indian steel companies. This move is expected to strengthen the industry, reduce the country’s dependence on imported steel, and promote self-reliance in the steel sector.

By ensuring fair competition, India is set to support the growth of its domestic steel manufacturers while protecting them from unfair trade practices that have been hindering their growth.