India’s finished steel imports have witnessed a significant surge, reaching 5.768 million tonnes (MT) during the period from April to October 2024. This marks an alarming 42.1% year-on-year increase, stoking concerns within the domestic steel industry. The rapid rise in imports has raised alarms among large Indian steel producers and trade associations, who have called on the government to take protective measures. The demand is now for the imposition of additional duties on cheap steel imports to safeguard the interests of local manufacturers.

In response, the Ministry of Steel recently proposed a 25% safeguard duty on certain steel imports, a move designed to curb the influx of cheaper foreign steel and bolster domestic production. However, this proposal has sparked dissent from the micro, small, and medium enterprises (MSMEs) sector. MSMEs argue that the additional duties would render their products uncompetitive both in domestic and international markets. They contend that rising local steel prices, exacerbated by these new duties, would further impede their ability to remain viable in an increasingly competitive global market.

The import data for India’s finished steel paints a worrying picture. From FY20 to FY24, India’s finished steel imports grew at a compound annual growth rate (CAGR) of 5.29%. In FY24, the country turned into a net importer of finished steel, with imports reaching a staggering 8.3 million tonnes, a marked increase from 4.7 million tonnes during the Covid-19 pandemic. The trend is expected to continue, with projections suggesting that by FY25, steel imports could surpass 10 million tonnes.

China, South Korea, and Japan have been the primary exporters, accounting for 78.6% of India’s total finished steel imports in FY24. China, in particular, has taken the lead, exporting 2.6 million tonnes in FY24 alone, followed by 1.7 million tonnes in the first seven months of FY25. While South Korea held the top position until FY23, China’s increased exports have shifted the balance. Other notable shifts include a rise in Vietnam’s share of India’s steel imports, from 1.27% in FY20 to 8.86% in FY24, while Indonesia and Germany’s shares have significantly declined during the same period.

The growing dependence on imported steel has prompted the industry to call for a more balanced approach in policy, one that addresses the needs of both large steel producers and MSMEs. As India moves forward with its industrialisation and infrastructure development, the steel sector’s health remains critical to its long-term economic prospects. Balancing import duties, promoting domestic production, and ensuring the competitiveness of MSMEs will be pivotal in shaping the future of India’s steel industry.