India Plans Tax on Some Low-Cost Steel Imports from China

Temporary levy of 15%-25% on China-origin steel imports within 6 months scrapped Steel Minister H.D. Kumaraswamy said the move was aimed at protecting local manufacturers against cheap Chinese steel undercutting local prices.

Kumaraswamy said in an interview with Reuters he faced the challenges of higher Chinese imports, which could be done through unfair trade practices. The government “is determined to protect the Indian steel industry and ensure fair competition,” he said.

In December, New Delhi initiated an investigation to determine whether a safeguard duty a temporary tax to restrain steel imports was needed. If put in place, the duty could remain for as long as two years.

“Based on an ongoing investigation, we have considered safeguard duties anywhere from 15-25% to ensure a level playing field for Indian manufacturers,” he added.

The spike in Chinese steel imports has coincided with India turning net importer of finished steel for the fiscal year ending March 2024. From April to December 2023, Chinese steel shipments were at record levels. Despite strong domestic demand, fueled by rapid economic growth and infrastructure building, Indian steel prices have slumped. Smaller mills have had difficulty, with some forced to reduce production and contemplate layoffs, as reported in December.

The problem could get worse if Asian steel exporters, especially South Koreans and Japanese, find their way to India, as U.S. tariffs make those markets less viable. Duty-free access under India’s free trade agreements (FTA) with these countries could continue to have a bearing on domestic prices in FY2026, said ratings agency ICRA.

India’s steel exports have also taken a hit amid weak global demand, impacting top steelmakers such as JSW Steel, Tata Steel and Jindal Steel and Power. In response to these challenges, India is looking to new markets, including those in Africa, the Middle East, and Southeast Asia, Kumaraswamy said. To remain competitive, manufacturers have also been moving towards the production of high-value, specialized steel.

In a bid for long-term stability, India is broadening its sources of coking coal—critical in steel manufacturing by boosting purchases from Canada, Russia, Mongolia, Mozambique and the U.S. Australia used to account for almost 80% of India’s coking coal, but that proportion dropped to 62% in 2024 as India sought new suppliers.

The government is also planning to launch a production-linked (PLI) incentive scheme to promote low-carbon steel production. Going from grey steel to cleaner steel will need an investment of $20-25 billion which will be funded through green bonds, concessional financing and public-private partnerships, Kumaraswamy added.