Steel Safeguards & Carbon Pressures: India Navigates a Tightening Trade Horizon
How the 12% Safeguard Duty and EU CBAM Are Reshaping India’s Steel Market Ahead of the DGTR Verdict
Policy Tightens as Imports Slump
In April 2025, India introduced a 12% provisional safeguard duty on select flat steel imports for 200 days. This decisive measure, targeting low-cost imports primarily from China and Vietnam, coincided with a 28.8% year-on-year drop in finished steel imports during Q2 2025—from approximately 1.96 million to 1.4 million metric tonnes.
At the same time, India is preparing for the European Union’s Carbon Border Adjustment Mechanism (CBAM), set to launch in full from January 2026. CBAM could impose a 20–35% carbon tariff on Indian steel exports, significantly challenging India’s export competitiveness.
Safeguard Duty Explained: Scope, Mechanics, and Exemptions
- The duty targets flat-rolled non-alloy and alloy steel products, including hot-rolled coils, cold-rolled sheets, metallic-coated, and color-coated variants.
- It applies to imports priced under $675–964 per tonne CIF, depending on product type.
- The notification includes HS codes 7208–7226 and differentiates based on product price tiers.
Import Slump and Local Industry Recovery
- Q2 2025 saw imports drop nearly 30%, with China declining 45.8% and Japan down 65.2% year-on-year. While China and Japan imports slowed, South Korea remained the top supplier, handling about 0.5 million tonnes.
- Smaller steel mills paused job cuts as demand softened earlier in the year, citing relief from the safeguard tariff.
- Market prices for hot-rolled coils rebounded marginally, increasing by ₹4–₹5/kg, giving relief to domestic manufacturers and visibly boosting sentiment in metal stock prices.
What's Ahead: DGTR Verdict Due by August
The Directorate General of Trade Remedies (DGTR) concluded its injury investigation in March and will deliver its final report in August 2025. Depending on findings, the government could extend the safeguard period beyond 200 days or raise duties up to 24%.
Additionally, QCO enforcement through BIS norms will tighten, preventing clearance of non-certified steel imports once the safeguard window progresses.
Overcapacity and CBAM: Exporters Face New Risks
- Indian steel exports to the EU represented 23.5% of total exports in FY2022–23, amounting to over $13 billion.
- CBAM could cost exporters up to €551 million by 2034, with carbon levies reaching as high as $397/tonne under worst-case scenarios.
- Research by Rystad Energy suggests India may incur one of the highest carbon cost premiums, jeopardizing its standing as a price-competitive exporter.
Industry Voices: Views on Duty and Carbon Pressures
- H. D. Kumaraswamy, Union Steel Minister, welcomed the duty enforcement as a safeguard for domestic industry under “Atmanirbhar Bharat.”
- JCB India CEO Deepak Shetty cautioned that construction OEMs and MSMEs face cost increases of ₹4–₹5/kg, potentially squeezing smaller players.
- JSW Steel’s Jayant Acharya emphasized vigilance around continuing Chinese import flow, suggesting current duties may need expansion.
Actionable Guide for Trade Stakeholders
| Action | Why It’s Important |
|---|---|
|
Review imports vs CIF threshold |
Avoid inadvertent tariffs if products fall under safeguard price ceilings
|
|
Ensure BIS Certification
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Compliance will prevent stock rejection or port detention under QCO enforcement
|
|
Implement carbon audit capability
|
Necessary for exporters targeting EU markets to meet CBAM obligations
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Monitor DGTR findings and policy shifts
|
Duty recalibration could impact exposure and liabilities from Oct onward
|
Window of Opportunity Amid Turmoil
- The duty provides short-term relief and supports demand recovery, especially in infrastructure-linked consumption.
- However, sustained export growth depends on adaptation to CBAM and supply chain shifts as global overcapacity persists.
- Indian steel firms advancing low-carbon manufacturing may gain an edge and reduce CBAM liabilities.
Conclusion
India’s 12% safeguard duty serves as a temporary reprieve for its steel industry—a policy aimed at curbing unfair competition. But with CBAM looming and DGTR decisions pending, the Indian steel sector is facing a new normal of compliance, cost pressures, and export reshaping. Steel businesses that act now—by aligning imports with QCO/CIF thresholds, securing BIS certification, and preparing for carbon levy regimes—will be best placed for resilience and growth in an evolving global market.