The Central Government's recent decision to impose a safeguard duty on certain steel imports has triggered an immediate and significant increase in domestic steel prices, according to industry insiders in Ahmedabad. The move, aimed at protecting local manufacturers, is now set to raise costs for key sectors like construction, engineering, and automobiles.
Details of the New Import Tariff
The Union Finance Ministry, in a notification dated December 30, 2025, decided to levy a three-year safeguard duty on specific steel products. The duty is set at 12% in the first year, which will then be reduced to 11.5% in the second year, and finally to 11% in the third year. While this measure targets imports from countries like China, Vietnam, and Nepal, it excludes certain developing nations and does not apply to specialty products such as stainless steel.
Immediate Market Impact and Price Surge
The industry has reported a swift reaction in the market following the duty announcement. Tejas Joshi, President of CREDAI Gujarat, highlighted the sharp price jump, noting that steel which was priced around Rs 49,500 per tonne a fortnight ago has now reached Rs 57,500 per tonne. This marks an increase of approximately Rs 8,000 per tonne, or about 16%.
Pathik Patwari, Chairman of the ICC Gujarat State Council, provided further detail, stating that prices for specific products like hot rolled, cold rolled, and flat steel have increased by around Rs 2 per kilogram after the duty was imposed.
Consequences for Construction and Industry
The ripple effect of this price hike is expected to be substantial. Ankur Desai, Secretary of CREDAI Ahmedabad, assessed that the rising steel cost will impact the overall construction cost by around 2%. Translating this to real estate, he indicated that prices per square foot of carpet area may go up by approximately Rs 140.
While this presents a challenge for consuming industries, Patwari also pointed out a potential upside, suggesting the duty "will play a key role in the growth of the steel industry" by shielding it from low-priced imports. Interestingly, Joshi noted that despite the price increase, the overall demand for steel remains robust, driven by various ongoing development projects across the country.
Call for Extended Protection
The move has sparked calls from other segments of the domestic metals industry for similar protective measures. Chandragupt Prakash Mangal, Managing Director of a leading stainless steel manufacturing company, argued that the stainless steel sector faces comparable pressures from imports. He stated that extending safeguard measures to include stainless steel would help restore market balance and support domestic value addition by addressing the surge of low-priced imports that affect capacity utilization and pricing stability.
In summary, the government's protective tariff has successfully bolstered domestic steel producers but at the immediate cost of higher input prices for major economic sectors, with end consumers likely to bear the brunt through increased real estate and automobile costs.
