European Commission safeguard probe into steel may hit India

The European Commission (EC) has initiated safeguard investigation on steel products to ascertain whether import tariffs imposed by the US need to be countered to prevent Asian producers from flooding the European market, a move that may have a significant bearing on India’s steel exports.

The investigation, the notice for which was issued on Monday, will cover India as well though it is targeted primarily at the US. India is estimated to have shipped around 3.0-3.5 million tonnes of steel — roughly around 40% of the country’s total steel exports — to Europe so far this fiscal year.

The EC investigation was initiated on a suo moto basis and would cover 125-130 items in all grades of steel. Exporters who want to take part in the exercise have been requested to complete a questionnaire and respond within 21days.

At the upper limit, the probe is likely to last around nine months. However, it could be implemented within two months, industry sources said.

“This does not augur well for the steel sector as a whole. We are hopeful that the government will step in and initiate a bilateral dialogue with the European Commission to ensure that India gets exempted from any such safeguard duty,” said H Shivramkrishnan, Essar Steel’s director-commercial.

Safeguard duties are country-specific. If these are imposed, Indian steel companies are likely to direct a major part of that export to the growing domestic market.

“This is a regressive step and does not portend well for the future. We are likely to face collateral damage and this will cause short term pain,” an executive at a steel company that exports to the EU said.

The European Commission’s decision to initiate safeguard action is being seen as a key retaliatory move against US President Donald Trump’s move to impose steep tariffs on steel imports which have hit the European Union (EU) badly. While the US has for the time being suspended the tariffs, the EC is seen readying its ammunition to combat the fallout of what looks like the beginning of a long drawn out trade war.

Analysts covering the steel sector said the move is largely aimed at the US, but could end up hitting countries like India as well.

Source: THE ECONONIC TIMES