The Indian steel ministry has taken a significant step toward supporting the domestic steel industry by proposing a 25% safeguard duty on the import of certain steel items. The announcement was made during a high-level meeting held in New Delhi, attended by Union Minister of Steel H.D. Kumaraswamy and Commerce and Industry Minister Piyush Goyal. The meeting aimed to address the challenges faced by Indian steelmakers amid rising imports and ensure the sector’s long-term competitiveness.
The Meeting and Key Stakeholders
The meeting brought together senior officials from the ministries of steel and commerce, along with executives from leading steel companies, including SAIL, Tata Steel, JSW Steel, and AMNS India. The discussions revolved around measures to enhance production, boost quality, and address the growing competition from imported steel.
Piyush Goyal, in a post on X (formerly Twitter), emphasized the significance of the discussions:
“With both industries playing a vital role in India’s development journey, discussed ways to boost production, enhance quality, and further strengthen global competitiveness.”
H.D. Kumaraswamy echoed similar sentiments, highlighting the need for collaboration between the steel and commerce ministries to ease business operations for domestic players.
“Strengthening the steel and heavy industries sector is critical for building a self-reliant India,” Kumaraswamy noted on X. “We aim to foster innovation, boost domestic production, and enhance India’s position as a global manufacturing hub.”
Challenges Facing the Domestic Steel Industry
The proposal for a 25% safeguard duty comes in response to growing concerns raised by domestic steelmakers about the surge in cheap steel imports. In recent months, India has witnessed a sharp increase in steel imports, particularly from countries with which it has free trade agreements (FTAs).
According to research firm BigMint, India’s steel imports rose to 5.51 million tonnes (MnT) during April-September 2024-25, up from 3.66 MnT in the same period the previous year. Imports from China alone surged to 1.85 MnT, compared to 1.02 MnT in the corresponding period of 2023-24.
The influx of cheaper steel imports, especially under FTAs with countries like Japan, South Korea, and ASEAN nations, has posed significant challenges for domestic players. Around 62% of steel imports enter India at nil duty due to these agreements, leaving domestic producers struggling to compete.
Addressing Industry Concerns
H.D. Kumaraswamy and his ministry have been actively engaging with stakeholders to address these challenges. Speaking to PTI recently, Kumaraswamy acknowledged the issues faced by the industry and reiterated the government’s commitment to resolving them.
Steel Secretary Sandeep Poundrik also highlighted the complexities of the issue, noting that while safeguard duties could help address some concerns, shipments from FTA countries would remain unaffected.
“There is a genuine problem, and the ministry is aware of that,” Poundrik said, signaling the government’s intent to explore further measures to ensure a level playing field for domestic producers.
The Role of Free Trade Agreements
Free trade agreements have been a double-edged sword for India’s steel sector. While FTAs are designed to promote trade, some agreements allow Indian firms to partner with foreign producers and re-import steel at concessional rates, creating competitive pressures for local players.
Think tank Global Trade Research Initiative (GTRI) has called for careful scrutiny of these agreements. GTRI Founder Ajay Srivastava pointed out operational inefficiencies as another significant issue:
“Port delays and red tape are choking India’s steel user industries. Over 10,000 steel user units face financial strain due to delays at ports and unclear regulatory requirements.”
These logistical bottlenecks exacerbate the challenges faced by the steel industry, undermining its competitiveness in global markets.
The Push for Self-Reliance
The proposed safeguard duty aligns with the government’s broader vision of building a self-reliant India. Initiatives like Make in India and Atmanirbhar Bharat aim to reduce dependency on imports, promote local manufacturing, and enhance India’s global standing in critical sectors like steel and heavy industries.
Both Goyal and Kumaraswamy have emphasized the need for innovation and collaboration to achieve these goals. By creating an enabling environment for domestic producers, the government aims to foster growth, improve quality standards, and position India as a global manufacturing hub.
The Path Forward
The proposal for a 25% safeguard duty marks a significant step in addressing the challenges faced by India’s steel industry. However, its effectiveness will depend on how comprehensively it addresses the structural and operational issues plaguing the sector.
With rising imports, regulatory bottlenecks, and competitive pressures from FTA countries, the road ahead is not without hurdles. Yet, with strong policy measures and stakeholder collaboration, India’s steel industry can strengthen its position both domestically and globally.
The coming months will be crucial in determining how these proposals translate into actionable reforms, shaping the future of India’s steel sector.
