Report: Safeguard Action on Steel Imports Likely to have Minimal Impact

Rising imports have prompted the Ministry to consider levying a safeguard duty on steel imports, but HDFC Securities in a recent report stated that the domestic steel manufacturers will hardly benefit as the segment is already covered under existing Free Trade Agreements (FTAs). But the move is also intended to limit the flow of low-cost Chinese steel that had been undercutting domestic producers.

The report notes that around 62% of India’s incoming steel comes from FTA signatories (such as Japan, South Korea, Mauritius and the ASEAN nations), where steel comes in duty-free. So any new safeguard duty will hit non-FTA imports, especially those from China.

China has been dumping excess steel on international markets at reduced prices because of weak domestic consumption. This has squeezed Indian steelmakers, cutting their sales and profit margins. The government is looking at the safeguard duty as an instrument to protect local builders by increasing the prices of imported Chinese steel and promoting the consumption of domestic steel.

While domestic manufacturers expect short-term relief, industry insiders feel safeguard duty alone in the medium to long term may not provide a solution. Strengthening India’s steel sector against global competition will require broader policy measures and strategic investments.

India, which had a productivity of only 1 million metric tons (MT) of crude steel on the day of independence in 1947, has legally become the second largest producer globally, with a capacity of 180 million MT before the conclusion of FY24.

Yet India’s per capita steel consumption in 2023 stands at approximately 93 kg well below the world average of 220 kg. Consumption levels in rural areas are even lower, at around 22 kg per capita, weighing down total growth.

To fill this gap, the government targets to increase infrastructure investments, especially in rural areas. As per the National Steel Policy, India’s per capita steel consumption is projected to rise to 158 kg by FY31, fuelling the country’s fast-paced urbanization and industrial growth.