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Trade Body Recommends Tariff to Protect Domestic Industry Amid Rising Imports
Shares of Indian steel companies surged on Wednesday following a government recommendation to impose a 12% temporary tax on certain steel imports. The proposed measure, aimed at curbing a surge in cheap foreign steel, has fueled optimism about higher earnings and price hikes for domestic producers.
Steel Stocks Rally on Import Tax Proposal
The Nifty Metal Index jumped 1.6% in early trading, with leading steelmakers JSW Steel and Tata Steel gaining 3%, ranking among the top ten gainers on the Nifty 50 Index. State-run SAIL saw an even stronger rally, climbing 3.7%.
The rally follows a recommendation from India’s Directorate General of Trade Remedies (DGTR) to impose the 12% tax for 200 days on select hot-rolled coils, steel sheets, plates, and cold-rolled coils. The move is designed to shield Indian producers from surging imports, particularly from China.
Rising Imports Trigger Government Action
In December 2024, the Indian government launched an investigation into record steel imports, following concerns raised by leading steel manufacturers. With global trade tensions rising, Indian steelmakers have faced increasing competition from cheap steel imports, particularly from China.
Analysts See Profitability Boost for Steelmakers
Analysts at J.P. Morgan believe the tax creates a strong earnings growth opportunity for domestic steelmakers.
“The tax can potentially lead to price hikes of ₹1,500 to ₹2,000 per tonne in the near term,” said Parthiv Jhonsa, lead analyst for metals and mining at Anand Rathi Brokerage. “Earnings are expected to rise over the next one to two quarters as a result.”
India to Counter Trade Diversions from Japan and South Korea
The proposed tax may also help Indian steel mills absorb excess supply diverted from Japan and South Korea. Following U.S. President Donald Trump’s decision to impose a 25% tariff on steel imports, global suppliers are looking for alternative markets—India being a key destination.
With the proposed tax expected to be implemented soon, industry watchers anticipate greater pricing power for Indian steel producers and stronger financial performance in the coming quarters.
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