A technician operates a production management system at a workshop of Dewei Stainless Steel in Jiaxing, east China's Zhejiang province, March 23, 2023. (PHOTO / XINHUA)

India’s enactment of a five-year duty on some Chinese steel can see prices in the domestic market go up though it will provide a comfort zone for domestic manufacturers, experts said.

The country’s Ministry of Finance on Monday issued a government notification that an “anti-dumping” duty of $613 per ton is levied on flat-base steel wheels imported from China.

The anti-dumping duty on steel wheels was initially imposed in 2018 and the Directorate General of Trade Remedies, a wing of the Ministry of Commerce and Industry, has recommended extending it.

The decision was taken after Indian steel producers and sellers requested the government impose duty on Chinese stainless steel products as they have occupied a significant percentage of India's domestic steel market, selling at lower prices than local products

Explaining the reason for the decision, the notification said: "The evidence of export price indicates that the Chinese exporters are exporting the goods to third countries at significant dumped and injurious prices."

The decision was taken after Indian steel producers and sellers requested the government impose duty on Chinese stainless steel products as they have occupied a significant percentage of India's domestic steel market, selling at lower prices than local products.

The decision will provide a comfort zone for domestic steel manufacturers amid surging imports, experts said.

Industry insiders welcomed the decision. Analysts said that India’s steel manufacturing companies are likely to profit as they will no longer face competition in the domestic market.

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According to data available from India’s Ministry of Steel, China was the second-largest steel exporter to India from April to July, after South Korea. China sold 0.6 million metric tons during that period – up 62 percent compared to the same months in 2022.

The Indian steel industry has been looking for protection from Chinese imports to reduce the uncertainties they were facing, said Biswajit Dhar of the Centre for Economic Studies and Planning at Jawaharlal Nehru University in New Delhi.

The imposition of antidumping duty will provide the “comfort zone” they were looking for, Dhar added.

As a result, raw materials for the car industry in the domestic market will go up and the profit margin for the automotive sector will come down, said Sebastian Morris, a former professor at the Indian Institute of Management in Ahmedabad

The decision is a welcome move at home, said Vejendla Srinivasa Chakravarthy, the commercial director of the Steel Authority of India Limited. A very small section of importers brings in steel wheels, Chakravarthy said, and it will enable steel producers to invest more in steel wheels.

Experts noted that steel prices in the domestic market may go up, which will put pressure on industries that use steel.

As a result, raw materials for the car industry in the domestic market will go up and the profit margin for the automotive sector will come down, said Sebastian Morris, a former professor at the Indian Institute of Management in Ahmedabad.

Earlier this month, India's Steel Secretary Nagendra Nath Sinha said the government was monitoring the situation on steel imports after concerns were raised over potential dumping by Chinese sellers.

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Abhyuday Jindal, managing director of Jindal Stainless, said in late July that the Indian Prime Minister's office had launched a probe into the potential dumping of Chinese stainless steel products in the country.

The writer is a freelance journalist for China Daily.