Safeguard Duty Extension, China Curbs Set to Lift Indian Steelmakers

India’s steel sector is in for a better time, with a combination of domestic safeguards and Chinese capacity reductions giving local producers a stronger price environment. Analysts expect that demand will start to recover after the monsoons on the back of government spending and tax reforms during the current fiscal.

An important policy option under contemplation is the additional consideration of extending for three years the safeguard duty on imports of steel. This duty tends to make foreign steel expensive and discourages imports, providing domestic players a barrier against formidable overseas pricing-especially that from China. Currently, steel in India trades at around 9% discount to landed imports, which explains the efficacy of the duty. For local majors such as Steel Authority of India Ltd. (SAIL) and Tata Steel Ltd., this protection translates into more stable sales and improved profitability.

At the same time, China, the world’s largest steelmaker, is taking steps to rein in overcapacity. Through what Beijing calls its “anti-involution” campaign, regulators are tightening environmental norms and imposing production caps to shut inefficient mills. These measures are expected to trigger genuine output cuts in the coming months. Analysts at Emkay Global believe the move will alleviate global oversupply and enhance pricing power for Indian producers, while also increasing government revenues.

Together, the two policy shifts India’s import shield and China’s supply restraint—are likely to set a floor under steel prices. While the safeguard duty prevents steep price drops, elevated import costs act as a ceiling against sudden spikes. For domestic steelmakers, this stability offers greater predictability in operations and room to plan capacity expansion.

“The combined effect of India’s safeguard duty and China’s anti-involution measures could mark the beginning of a steadier cycle for the industry,” Emkay noted, adding that it remains positive on SAIL and Tata Steel.

With construction and infrastructure spending expected to pick up in the second half of FY26, industry watchers say Indian steelmakers may finally have the pricing cushion and demand tailwinds needed for sustained growth.