India’s steel industry, the world’s second-largest producer, is facing an unprecedented challenge as a surge of low-cost steel imports from China puts domestic mills under severe strain. The flood of Chinese steel, sold at prices 10% lower than Indian counterparts, has led to production cuts, potential job losses, and declining profitability for small and medium-sized steel mills that account for 41% of the country’s steel output.
In Mandi Gobindgarh, often referred to as Punjab’s “steel city,” mills are struggling to remain competitive. “If we cannot compete in the market, our plant won’t run at full capacity,” said Adarsh Garg, Chairman and Managing Director of Jogindra Group. Garg revealed that his company has seen a 30-35% drop in sales over the last six months, forcing a reduction in production capacity by nearly a third. “We will be forced to lay off 10% to 15% of our employees if this trend continues,” he warned. The influx of Chinese steel, sold at discounts ranging from $25 to $70 per ton compared to domestic steel, has further compounded challenges for Indian manufacturers. According to Raju John, Director General of the Builders Association of India, engineering firms and developers are opting for cheaper Chinese imports, making it increasingly difficult for Indian mills to compete.
China, the world’s largest steel producer, exports more steel than the rest of the world combined. This year, finished steel imports from China into India have surged by over 30%, reaching all-time highs. These imports include hot-rolled steel for construction and galvanised steel for the automobile sector, further affecting Indian mills’ market share. At the same time, Indian steelmakers have struggled to secure export orders. Mills in regions such as Pune and Maharashtra have reported losing significant orders to Chinese competitors. Neo Mega Steel, a Pune-based company, lost automobile industry orders, while Bhagyalaxmi Rolling Mill in western Maharashtra faced a sharp drop in exports, highlighting the extent of the crisis. Adding to the turmoil, India’s domestic construction industry, a key consumer of steel, is slowing down, which, combined with cheap imports, has resulted in capacity utilisation dropping by nearly a third in the past six months at small and medium-sized mills.
The financial fallout has been severe. Indian steelmakers reported profit margin declines of up to 91% this fiscal year, leaving companies unable to plan for expansion. Even large players like JSW Steel and Tata Steel have joined the Indian Steel Association in lobbying the government for curbs on Chinese imports. Amid growing concerns, industry leaders have urged the government to introduce measures to protect domestic producers. Proposals include imposing stricter quality controls and anti-dumping duties to level the playing field. However, any such measures will need to balance domestic interests with international trade obligations to avoid escalating trade tensions. India’s steel sector faces a pivotal moment. With small and medium-sized mills teetering on the brink of downsizing and layoffs, and large manufacturers losing export business, the call for government intervention has never been louder.
