India is considering imposing safeguard duties on steel imports from ASEAN nations as a measure to protect its domestic steel industry from an influx of low-duty or duty-free steel. This follows growing concerns over the rapid expansion of steel production capacity in the ASEAN region, driven largely by Chinese investments. The Indian steel and commerce ministries are currently deliberating on this issue in anticipation of the upcoming India-ASEAN Free Trade Agreement (FTA) review talks scheduled for February 2025.
The ASEAN region, with a steel consumption of around 75 million tonnes (MT) annually, is witnessing significant growth in production capacity. Chinese companies are investing heavily in setting up large-scale steel plants across ASEAN countries, with an additional 97 million tonnes of blast furnace-basic oxygen furnace (BF-BOF) capacity expected to come online within the next 5-6 years. This surge in capacity has raised concerns in India, as the region’s excess steel production could be diverted to the Indian market, which offers a significant tariff advantage due to the FTA. “The concern arises because these new capacities are primarily intended for export, and India, with its low-to-zero tariff advantage, could become a prime destination for this excess steel,” explained Alok Sahay, Secretary General of the Indian Steel Association.
The Indian steel market, which saw a significant rise in imports from ASEAN countries, is already feeling the impact of the oversupply. According to the latest figures, iron and steel exports to India from these six ASEAN nations reached ₹29,252 crore in 2023-24, up by 19% compared to the previous year. The influx is putting pressure on domestic steel prices, which are already under strain due to India’s finished steel production meeting domestic demand. Industry experts warn that unless measures are taken, such as the imposition of a safeguard duty, domestic steel prices could remain suppressed. India’s finished steel production for FY24 stood at 139 MT, while consumption was at 136 MT, indicating that the market is already balanced, and any additional imports could destabilise the pricing structure further. While the ASEAN region’s steel consumption is expected to grow modestly, the overcapacity is seen as a threat to India’s steel producers. Industry leaders fear that the FTA tariff advantage could exacerbate the situation, leading to an oversupply that may hinder growth in India’s own steel sector.
