India's recent decision to impose minimum import price on certain steel items to ward off a surge in import of cheap Chinese products has now come to haunt the country at the World Trade Organisation, with a host of countries, including Japan, the EU, Korea, Australia and Canada opposing the impost alleging that it is against multi-lateral trade rules.
The countries also criticised safeguard duties imposed by India on steel recently.
India had maintained that the minimum import price was only a short-term measure, which would be removed once the import surge ceases.
Also, India is not alone in adopting protectionist measures to stop steel imports as several other countries are taking measures to stop dumping of the metal.
With excess steel capacity the world over, and India itself facing a slump in demand for local steel, the government was left with no option than imposing price curbs to stop dumping.
India's Directorate General of Anti-Dumping and Allied Duties (DGAD) is currently investigating possible dumping of cheap steel products into the country by six nations, including China, Japan and South Korea.
The anti-dumping authorities are also probing over the export of cheap hot-rolled flat steel products in coils and sheets into India from Russia, Brazil and Indonesia.
Exporters have 40 days to respond to the notice of initiation.
The investigations follow complaints by domestic steelmakers, including JSW Steel, Essar Steel and Steel Authority of India, to the DGAD demanding that anti-dumping duties be slapped on cheap imports flooding local markets and pressuring margins.
India slapped the minimum import price after steel imports into the country surged 20 per cent in the financial year ended 31 March 2016, government data show.
In its representation at the Goods Council meeting of the WTO, Japan said the MIPs were having a significant adverse impact on exports from the country and were clearly inconsistent with GATT rules.
Canada, Australia, the EU and Chinese Taipei also backed Japan's demand that India should withdraw the MIP.
New Delhi imposed an MIP, ranging from $341 to $752 per tonne, on 173 steel products in February, in response to a surge in steel imports in 2015-16, which increased 25.6 per cent to 11.71 million tonnes, against 9.32 million tonnes in 2014-15.
Japan and the EU also raised concerns on the safeguard duties (penal import duties to protect domestic industry against import surges) imposed on imports of hot-rolled flat steel products last year by India.
The representative from the EU pointed out that safeguards are one of the most trade-restrictive tools because they apply to imports from all countries, and that India should have instead initiated an anti-dumping or countervailing investigation on the targeted goods.
India, however, believes that it is well within its rights to apply the duties.
''The WTO allows members to impose safeguard duties and we strictly followed prescribed rules to determine safeguard duties on steel products,'' the official said.