Steel Policy Contradictions Could Raise Costs and Slow Growth: GTRI

India’s steel sector could face mounting cost pressures and slower growth due to conflicting policy signals, according to an assessment by the Global Trade Research Initiative (GTRI). The report highlights that while the government has stepped up protection for domestic steelmakers, parallel restrictions on critical raw materials are undermining the intended benefits.

Over the past few years, the government has relied on safeguard duties, anti dumping measures and quality control orders to shield domestic steel producers from import competition. These steps were aimed at ensuring capacity utilisation and supporting local manufacturing. However, GTRI said these gains are being offset by curbs on essential inputs, especially low ash metallurgical (LAM) coke, which plays a vital role in steel production and has limited substitutes.

Restrictions on LAM coke imports through quotas and duties have pushed up input costs, squeezing margins for steelmakers. This policy contradiction, GTRI noted, effectively acts as a tax on growth. Higher steel prices cascade through the economy, raising costs for infrastructure projects, construction activity, capital goods manufacturing and other downstream industries that depend heavily on steel.

The think tank warned that while protecting domestic metallurgical coke producers is a valid objective, excessive layering of controls on non substitutable input risks over correction. Such an approach could weaken the competitiveness of Indian steel in global and domestic markets, ultimately harming the very producers the policy seeks to protect.

GTRI also flagged the expiry of quantitative restrictions at the end of 2025 as a crucial opportunity for policy reset. It recommended restoring predictable and adequate access to LAM coke by lifting or sharply expanding import quotas. The report further called for avoiding overlapping regulatory measures and recalibrating duties using realistic dry bulk freight assumptions to better reflect actual costs.

According to GTRI, aligning regulations on both outputs and inputs is essential for a stable and competitive steel ecosystem. Policies, it said, should complement each other rather than work at cross purposes. A coherent regulatory framework would help moderate costs, support investment decisions and enable the steel sector to continue playing a central role in India’s infrastructure push and long term economic growth.