India’s Steel Industry Unshaken by EU Import Curbs, Local Demand to Offset Impact

India may be harming the EU steelmakers, who need more fresh goods; The European Commission in September imposed high import taxes to protect local producers.

India is confident that its booming domestic steel demand would offset the EU’s move to tighten steel import quotas effective April, a source familiar with the development said.

The European Commission said on Tuesday it would tighten import curbs to shield its ailing steel industry from a surge of global imports. The new restrictions are intended to limit the amount of steel that can enter the 27-nation bloc without tariffs and could affect key exporters, including India.

“There will be some effect, but with our domestic consumption growing so fast, the industry should be able to absorb it,” the source, who spoke on the condition of anonymity because India has yet to make an official statement on the situation, said. The Ministry of Steel did not reply to a request for comments from Reuters.

India’s total steel consumption far exceeds its exports, despite the EU being a key export destination for Indian steel. India exported 2.03 million metric tons of steel from April 2023 until February 2024 to the EU, making up 46 percent of its overseas shipments. Yet, during the same financial year, India’s overall steel exports reached 7.5 million metric tons but domestic consumption had ballooned to a whopping 136 million metric tons.

The source also rejected concerns over the U.S. introducing “protectionist measures” by imposing new tariffs on imports of steel, which they said are “insignificant” as far as Indian exports to the United States are concerned. However, China’s involvement in the global steel trade remains a key point. While Chinese steel exports to the U.S. are modest, lessening the risk of shipments being diverted to India, China remains India’s primary worry.

In the past few months, India has been a net steel importer, with the first ten months of this financial year reporting record shipments from China, South Korea and Japan. To guard against rising imports, the Indian government recently announced a provisional 12% safeguard duty, that will be in effect for 200 days, on some steel products to protect domestic producers.

Supported by high internal demand and India’s proactive policy response, the Indian steel sector seems to be able to weather the storm around the tightening of global trade.