India’s steel imports are expected to decrease by 50% in the 2025/2026 fiscal year if the government implements a 12% safeguard duty for 200 days, according to a report from the Indian credit rating agency ICRA, as reported by The Economic Times.
This move is anticipated to boost the profitability of local steel mills by reducing foreign competition and supporting domestic production.
Proposed Safeguard Duty on Flat Steel Imports
The Directorate General of Trade Remedies (DGTR) has proposed a temporary 12% safeguard duty on imports of alloy and non-alloy flat steel products. This duty would be applied for 200 days following an investigation into the surge in steel imports. The final decision will be made by the Ministry of Finance.
ICRA's Forecast for Domestic Steel Sector
Girish Kadam, Senior Vice President at ICRA, stated that, with the reduction in imports and a projected 7-8% growth in domestic demand for FY2025/2026, capacity utilization in the Indian steel sector is expected to rise to 83%, up from 78% in the previous fiscal year. This increase in capacity utilization is likely to improve the financial health of local steel manufacturers.
Price Support and Market Dynamics
Sekhul Bhatt, Research Director at Crisil Intelligence, believes that the temporary safeguard duty will provide price support to local producers, particularly in the first half of FY2025/2026. This comes as global trade dynamics shift, with several countries imposing restrictions on steel imports. The safeguard duty would offer protection to India’s domestic market against a surge in cheaper foreign steel.
Investigation into Steel Imports
The DGTR initiated an investigation into the sudden surge in imports of unalloyed and alloyed flat steel products in December 2024, after a complaint by the Indian Steel Association. The investigation revealed that the rapid increase in imports could threaten local steel manufacturers, leading to potential damage that may be irreversible if safeguards are delayed.
Encouraging Domestic Sourcing of Raw Materials
In another move to support the steel industry, India may extend restrictions on imports of low-ash metallurgical coke beyond June 2025. This is part of an effort to encourage local sourcing of the material, which would further benefit domestic steel mills.
With these protective measures in place, India's steel sector could see a significant boost in its capacity, profitability, and overall competitiveness in the global market.
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