The government's decision to impose 20 per cent provisional safeguard duty on certain grades of flat steel has upset some user segments, which are even considering moving court against it.

"We are planning to approach the courts to counter these moves. A number of steel user segments have approached us to take up the matter," said Mohan Gurnani, president ofFederation of Associations of Maharashtra (FAM). "This will have a tremendous adverse impact on the 'Make in India' campaign. Industries that will face trouble include tubes and pipes, general fabrication, engineering and automobiles."

The user industries have also written to the Directorate General (Safeguards) since the notification on initiating investigation into imports had said any other party to the investigation that wishes to be considered as an interested party may submit a request to DGS office within the next 15 days.

According to Gurnani, the government had raised customs duty on steel twice — in June and August — and had the option of raising it by another 2.5 per cent, but did not resort to it. "Instead, the government imposed 20 per cent safeguard duty. The question is how far will the government go to protect the interest of steel producers at the expense of a large number of steel users?" Gurnani said.

Cold-Rolled Steel Manufacturers' Association (CORSMA), Bombay Iron Merchants Association (BIMA), Steel Wire Manufacturers Association of India (SWMAI) and Steel Chamber of India are among the industry bodies representing the user segments that are upset with the duty. However, leading steel companies including SAILBSE 2.88 %, Tata SteelBSE 0.50 %,Essar SteelBSE 0.41 % and JSW SteelBSE 0.54 %, which had petitioned the government for a safeguard duty, have countered this argument.

"Global steel capacity, aided by devaluation of currencies, has found easy access to the Indian market. The surge in imports at lower prices have hurt the Indian steel industry. The trade actions taken by various countries is also a reflection of serious threat from such imports. The government has recognised this threat and taken timely action in accordance with the safeguard duty provisions," said H Shivramkrishnan, chief commercial officer at Essar Steel.

Import of steel products, which had been rising over the last one year, surged around September 2014. That was the time when the average monthly volume of imports spiked to 2.7-2.8 lakh tonnes from its earlier level of around 1.6 lakh tonnes. Indian producers' market share too dropped from 45 per cent to 37 per cent between FY14 and Q1FY15.