India imposes Quantitative Restrictions on imports of Metallurgical Coke

The year 2024 ended with a notification from India’s Ministry of Commerce & Industry (‘MOC’) that left many surprised.  On 26 December 2024, the MOC implemented quantitative restrictions on imports of Low Ash Metallurgical Coke having ash content below 18%, which falls under HS codes 2704 0020, 2704 0030, 2704 0040, 2704 0090.[1]  This is a crucial raw material for the steel industry that follows production through the blast furnace route.  The quantitative restrictions shall be effective from 1 January 2025 to 30 June 2025.  The quantitative restrictions, however, do not apply to imports of certain types of Metallurgical Coke, which are as follows:

1. Coke fines/coke breeze, and
2. Ultra-low phosphorous metallurgical coke with phosphorous content up to 0.030% with size up to 30 mm with 5% size tolerance for use in ferroalloy manufacturing.

The implication of the quantitative restrictions is that traders and users cannot import Low Ash Metallurgical Coke into India that exceeds the quantities allocated to different countries.  For example, imports from Australia from 1st January to 30th June cannot exceed 51,276 MT.  Half of this quantity can be imported in the January-March quarter, and the remaining half can be imported in the April-June quarter.  See the table below for the quantities allocated to different countries.

User industry in India is validly concerned by this development.  At a time when the Indian steel industry is already experiencing tough competition from steel imports in India, uncertainty in demand, and worried about the escalation in US-China trade war and its spillover effects on India, such move by the Government of India was not anticipated.  This is especially when the recommendation to impose the quantitative restrictions was placed by the Directorate General of Trade Remedies (‘DGTR’) before the MOC on 29 April 2024.[2]  Perhaps the MOC’s non-action on the DGTR’s recommendation for several months led to an impression that the quantitative restrictions shall not be implemented.

Having said that, here we are with quantitative restrictions in effect from 26 December 2024.  The user industry in India is in a race against time to plan their procurements for the next six months and some would have to redraw their plans, which would impact already concluded contracts.

A trade notice dated 30 December 2024 prescribes the procedure to apply for import authorization to import Low Ash Metallurgical Coke.[3]  Parties intending to import between 1 January to 30 June 2025 need to apply on the DGFT website.[4]  It is generally understood in the trade that Low Ash Metallurgical Coke is imported in vessels that accommodate about 30,000-32,0000 MT quantity.  Thus, where Indonesia is allocated a total quantity of 66,364 MT for the duration of the quantitative restrictions, it means that slightly more than two vessels of Low Ash Metallurgical Coke only can be imported from Indonesia between 1 June to 30 January 2025.  An applicant must keep such aspects in mind while applying for the import authorization because for each country, an applicant needs individual import authorization as explained in the procedure.  Where a part of the quantity allocated to a country remains unutilized, that portion shall be added to that country’s specific quantity for the next month.  Where a country exhausts its allocated quantity, it can use the available residual quantity.  The question here is, what is this ‘residual quantity’; is it the quantity mentioned against ‘Others’ or is it the quantity left unutilized by another country? This question gains more importance in the light of the fact that perhaps Singapore does not have any manufacturing facility for Low Ash Metallurgical Coke; at least this was the argument raised during the proceeding before the DGTR.[5]  Therefore, if there is no manufacturing of Low Ash Metallurgical Coke in Singapore, no user would seek an import authorization for importing Singapore origin Low Ash Metallurgical Coke.  Because, even if such import authorization is granted, how would the importer demonstrate that the origin of such Low Ash Metallurgical Coke is Singapore when it was not manufactured or sufficient value addition did not take place in Singapore? So, what happens to the unutilized quantities of Singapore; will such quantities be treated as residual quantity that is available to be utilized; will such unutilized quantities be added to the ‘Others’ category and then it shall be made available for utilization? How would applicants come to know that quantities of certain countries such as Singapore are unutilized so that they could clear their consignments against such ununtilised quantities?

MOC took almost eight months to decide that quantitative restrictions should apply on Low Ash Metallurgical Coke.  This is after the DGTR had already taken ten months to investigate and then made a recommendation on quantitative restrictions to the MOC.  The manner of quantity allocations to different countries could have been examined in more detail including whether some countries even have manufacturing facility for Low Ash Metallurgical Coke, and thus should they be allocated a quantity in the first place.  At this point though, parties have until 12 January 2025 to apply for an import authorization on the DGFT website and they must act at the earliest.

[The author is a Partner in International Trade & WTO practice at Lakshmikumaran & Sridharan Attorneys, New Delhi]

[1] See Notification No. 44/2024-25 dated 26 December 2024 issued by the Ministry of Commerce & Industry available here, last visited on 6 January 2025.

[2] Final Findings dated 29 April 2024 issued by the Directorate General of Trade Remedies in Case No. – SG (QR)-04/2023 available at https://egazette.gov.in/(S(mwqjb2tphg3xodh0fcmpwtqy))/ViewPDF.aspx, last visited on 6 January 2025.

[3] Trade Notice No. 25/2024-25 dated 30 December 2024 available at https://www.dgft.gov.in/CP/?opt=trade-notice, last visited on 6 January 2025.

[4] Visit link https://www.dgft.gov.in/CP/?opt=import-management-system.

[5] During the investigation before the DGTR, arguments were raised that there are no manufacturing facilities for Low Ash Metallurgical Coke in Singapore, Switzerland and UAE. Refer paragraph 70c of the Final Findings dated 29 April 2024, supra note 2.