India Enacts Long-Term Steel Barriers, Cooling 11th-Hour Hopes for U.S. Trade Deal
India Enacts Long-Term Steel Barriers, Cooling 11th-Hour Hopes for U.S. Trade Deal
NEW DELHI — In a move that signals a hardening of protectionist policy just days before the year’s end, the Indian government has formally imposed a long-term safeguard duty on steel imports, valid through April 2028.
The decision casts a long shadow over the prospects of an imminent trade breakthrough with the United States. For observers tracking the likelihood of a U.S.-India Free Trade Agreement (FTA) or a limited tariff deal before the close of 2025, New Delhi’s latest order represents an entrenchment of barriers rather than the liberalization required for such accords.
The Protectionist Signal The order levies a safeguard duty of 11-12% on non-alloy and alloy steel flat products—critical inputs for the automotive and consumer durables sectors. While the duty structure is designed to taper slightly over three years, settling at 11% in 2028, its enactment signals that the influential Indian Steel Association successfully lobbied for protectionism over competition.
This creates significant friction for any pending bilateral agreements. With the 2025 deadline for a potential deal nearly exhausted, India’s decision to erect new tariff walls complicates the narrative of a mutual reduction in trade barriers. Furthermore, by locking these duties in until April 2028, New Delhi has effectively removed these steel categories from the negotiating table for the next three years, reducing the surface area for a comprehensive FTA in the medium term.
The "High-Value" Nuance Despite the negative signal for trade diplomacy, a critical technicality may spare high-grade U.S. exports from direct economic impact. The order includes a Minimum Import Price (MIP) mechanism, exempting imports priced above a certain threshold—such as $675 per tonne for hot-rolled coils.
Given that U.S. steel production is typically higher-cost and higher-value, American exports may naturally bypass the safeguard duty, which is primarily aimed at predatory pricing from China and Vietnam. However, the legal enactment of the duty reinforces India’s "Atmanirbhar Bharat" (self-reliant India) strategy. It suggests that despite the technical exemption for high-value goods, the political will for a sweeping trade deal involving tariff concessions remains low.
Closing the Policy Gap The timing of the order is decisive. A provisional 200-day duty expired in early November 2025, leaving domestic prices vulnerable. By formally accepting the Directorate General of Trade Remedies’ (DGTR) recommendation this week, the government has retroactively bridged that policy gap. This ensures the duty remains in force continuously, effectively freezing the status quo regarding steel market access through the next U.S. election cycle.