Despite recommendations from trade officials and local steel manufacturers, India will not impose a countervailing duty (CVD) of 18.95% on certain flat-rolled steel products imported from China, a government source told Reuters. This decision by the finance ministry is aimed at protecting steel consuming firms from higher prices, even though it could potentially harm local steel manufacturers.

“Imposing CVD protects manufacturers, but users end up paying a higher cost,” said the official, who chose to remain anonymous as the final decision has not been made public. “So you have to balance the interest between users and manufacturers.”

CVDs are additional taxes imposed on imported goods that are subsidised in their home country, thus potentially damaging the industries in the importing country. Over 170 Indian steel companies, including Jindal Stainless Ltd and Steel Authority of India, have backed a petition to re-impose CVD for another five years, according to a report by the Directorate General of Trade Remedies (DGTR).

Despite steel purchases from China reaching a six-year high in the April-May period, with imports rising 62%, the finance ministry has rejected the recommendation. The official stated that imposing CVD would have hurt small and medium consuming companies while benefiting a few large conglomerates at a time when India’s economic recovery is rapid but uneven.