India is gearing up to impose retaliatory customs duties on certain goods imported from the European Union (EU), following unresolved issues over the EU’s safeguard measures on steel imports. The Indian government has notified the World Trade Organization (WTO) about its plan to raise duties on specific products produced in the EU, citing losses due to the EU’s protectionist stance on steel products.
The dispute stems from the European Union’s decision to extend its safeguard duty on steel imports, which has negatively impacted India’s steel exports. According to the Indian government, these safeguard measures, which have been in place since 2018, have resulted in a trade loss of $4.41 billion for India. To address this, India is proposing retaliatory duties worth $1.10 billion, a move that aligns with WTO guidelines for dispute resolution.
EU Extends Safeguard Duty on Steel Until 2026
The European Union has been imposing a safeguard duty of 25% on certain categories of steel products since 2018. Initially set to expire in 2024, this duty has now been extended until 2026. India, which is a significant exporter of steel to the EU, has voiced its concerns about this extension. The safeguard measures have limited India’s access to the European market, impacting the competitiveness of Indian steel products.
In response to the EU’s actions, India has reserved its right to suspend concessions and increase customs duties on selected goods from the European Union. The Indian government has also stated that it may make this suspension effective immediately and will adjust the rates on EU imports to reflect the lost trade value.
India’s Exports to the EU Continue to Rise Despite Dispute
Despite the ongoing trade tensions, India’s exports of iron, steel, and related products to the European Union have grown. In the financial year 2023-24, these exports reached $6.64 billion, up from $6.1 billion in the previous fiscal year. However, India’s concerns are focused on the fairness of the EU’s safeguard measures, which it believes violate global trade rules.
India had earlier engaged in bilateral discussions with the EU to resolve the issue, but no consensus was reached. Now, the Indian government is preparing to take further steps, which may involve the implementation of increased customs duties on EU products as a form of trade compensation.
Next Steps in the WTO Process
India plans to inform both the Council for Trade in Goods and the Safeguards Committee at the WTO about its upcoming actions. The country is expected to provide a detailed list of products that will face higher customs duties, and it has indicated that these measures could come into force soon.
As the dispute continues, India’s move to impose retaliatory duties could escalate tensions between the two major trading partners, affecting a range of industries beyond steel.
