"DGS is looking into the demand of domestic steel producers for safeguard duty on steel imports and will take a decision soon," a senior government official said.
The Directorate General of Safeguards (DGS) has examined the application from major steel producers -- SAIL, Essar Steel and JSW Steel -- and "found that prima-facie increased imports of (certain kinds of steel) have caused or are threatening to cause serious injury to the domestic producers... and accordingly, it has been decided to initiate an investigation."
The domestic steel producers have complained of surge in imports of steel products like hot-rolled steel and other variants from China, Korea, Japan and Russia.
The three players, representing 50 per cent of the domestic production, had moved DGS, for imposition of the levy on imports of hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more for four years.
The domestic industry, DGS said, has also requested for imposition of provisional safeguard duty in view of a steep deterioration in the performance of this industry in view of imports surge.
According to DGS, the market share of domestic producers has been declining since 2013-14 and is likely to fall from 45 per cent to 37 per cent in 2015-16.
The steel producers are seeking safeguard duty as it would also cover imports from countries like Japan and South Korea, with which India has free trade pacts.
Last month, the government had hiked import duty on base metals, including iron and steel, by 2.5 per cent in a move aimed at helping domestic players battling cheap Chinese imports after the currency devaluation by China.
The safeguard duty is imposed by the revenue department on the recommendations of DGS.
Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain timeframe to avert any damage to a country's domestic industry from cheap imports.
The imports increased to 33,79,360 tonnes in 2015-16 (annualised), from 12,92,099 tonnes in 2013-14. The percentage of import with respect to domestic production rose to 13 per cent, from 5 per cent during the period.
In June, India imposed anti-dumping duty of up to $316 per tonne on imports of certain steel products from three countries, including China, to protect domestic producers from below-cost inbound shipments.