The Indian government’s new 12% safeguard duty on five categories of imported steel may halt imports and push buyers toward domestic suppliers, who are likely to raise prices further, according to the think tank Global Trade Research Initiative (GTRI).

The report noted that Indian producers are unable to meet the demand for specialized steels like abrasion-resistant plates, making imports necessary. However, the newly imposed safeguard duty could drive input costs up by 8 to 10%, mirroring recent price increases by domestic steel manufacturers.

GTRI founder Ajay Srivastava cautioned that the policy could hurt micro, small, and medium enterprises (MSMEs), which contribute 33% of manufacturing output. Burdened by rising costs and supply limits, MSMEs may struggle to survive, potentially impacting exports and GDP.