New Delhi: The finance ministry on Wednesday extended the safeguard duty on steel imports until March 2018 to protect domestic manufacturers from cheap Chinese imports.

This is among a host of measures the government has either taken or plans to take to revive the stressed steel sector.

The government imposed a provisional safeguard import duty on some steel products in September last year for 200 days.

In February, it also set a minimum floor price for steel imports for six months to protect domestic producers hurt by cheaper Chinese imports.

In a notification, the central board of excise and customs, the indirect tax arm of the finance ministry, said the duty will apply to hot-rolled flat products of non-alloy and other alloy steel in coils of 600 mm width.

The safeguard duty will be 20% minus any existing dumping duty till September 2016, following which it will be reduced to 18% till March 2017, then brought down to 15% till September 2017 and eventually to 10% by March 2018.

The safeguard duty will not be imposed on goods that are imported at minimum import price.

Steel imports grew 71% in 2014-15, with China accounting for almost 36% of the total imports.

In the April-November 2015 period, imports rose 34%.

With the government announcing steps to remove hurdles faced by the road and power sectors, steel and textiles remain the major source of burgeoning bad debts at state-run banks.

The government is hoping these measures, along with the bailout package it is planning for the steel sector, will help revive the industry and in turn reduce bad loans on banks’ books.

Steel secretary Aruna Sundararajan said earlier this month at a CNBC TV18-Mint infrastructure event that the steel ministry and the finance ministry were working on a financial bailout package that will be ready in the next two months.

“There are a broad range of proposals that include banks taking certain equity as redeemable preference shares and then giving the companies enough time to redeem them," Sundararajan said.

“There are other proposals, where we are looking at bringing in financial investors who can hold some of these stakes for a period of time, and then when the company comes back to health, they can disinvest," she added.

“We are also looking at bringing in certain external or international investors who can pump in fresh equity into these companies. There has been a fair degree of interest from international investors."

India Ratings and Research Pvt. Ltd, in a note dated 9 March, pointed out that Chinese steelmakers, faced with modest domestic demand, had relied on exports to keep themselves afloat and selling the alloy at a marginal cost to sustain operations.

A strategic depreciation of the yuan has also aided the competitiveness of Chinese steelmakers; economies like India where demand for steel is still rising have been their preferred export destinations.

“It is a welcome step which will be beneficial to the industry. Hot-rolled flat products of non-alloy and other alloy steel in coils of 600mm width are among the major items that are imported and extending the safeguard duty will help the domestic industry," said Bijoy Thomas, Analyst at India Ratings and Research.

To be sure, the net effect of this step will be higher prices of steel products for consumers, a negative flagged by the Reserve Bank of India governor Raghuram Rajan in a speech in New Delhi last month.