India’s Steel Industry Faces Challenge as Chinese Imports Hit Record High

India’s finished steel imports from China have reached unprecedented levels, posing significant challenges to the domestic steel industry.

Record-Breaking Imports

Between April and October 2024, India imported 1.7 million metric tons of finished steel from China, marking a 35.4% year-on-year increase and setting a new record. This surge contributed to total finished steel imports climbing to a seven-year high of 5.7 million metric tons during the same period.

Reuters

Impact on Domestic Producers

The influx of low-cost Chinese steel has adversely affected Indian steelmakers, particularly small and medium-sized enterprises (SMEs). These SMEs, which account for 41% of India’s steel production and employ over 1.5 million people, have experienced a nearly one-third reduction in capacity utilization over the past six months. The price disparity, with Chinese steel often being 10% cheaper, has led to decreased sales and potential job cuts within the sector.

Reuters

Government Response

In response to industry concerns, India’s Ministry of Steel has proposed a 25% safeguard duty on flat-steel products to curb the influx of cheap imports. The ministry emphasized the threat posed by the surge in low-priced Chinese steel to the financial health of domestic producers and the country’s goal of expanding steel production capacity.

Reuters

Industry Perspectives

Industry leaders have expressed apprehension regarding the long-term effects of these imports. T.V. Narendran, CEO of Tata Steel, warned that prolonged exposure to unfairly priced Chinese steel could deter future investments in India’s steel sector. Similarly, Dilip Oommen, CEO of ArcelorMittal Nippon Steel India, advocated for doubling the customs duty on steel to 15% to protect domestic manufacturers from predatory pricing.

Reuters

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India’s steel imports from China have reached a record high, significantly impacting the domestic steel industry. Here’s a summary based on recent data:

Key Highlights

1. Record Steel Imports from China:
   • India imported approximately 1.7 million metric tons of finished steel from China between April and October 2024.
   • This represents a 35.4% year-on-year increase, marking the highest import volume recorded.
2. Overall Import Trends:
   • Total finished steel imports in the same period hit a seven-year high of around 5.7 million metric tons.

Impact on the Domestic Steel Industry

1. Pressure on Small and Medium Enterprises (SMEs):
   • SMEs, which produce 41% of India’s steel and employ over 1.5 million workers, have seen a significant drop in capacity utilization due to cheaper imports.
   • Chinese steel prices are reportedly 10% lower, leading to reduced competitiveness and potential job losses.
2. Investment Concerns:
   • Industry leaders fear the influx of low-cost imports could discourage investment in India’s steel manufacturing sector.

Government and Industry Response

1. Proposed Safeguard Measures:
   • The Ministry of Steel has suggested imposing a 25% safeguard duty on flat-steel products to curb the import of cheap Chinese steel.
2. Calls for Higher Customs Duties:
   • Industry executives have proposed increasing the customs duty on imported steel to 15%, aiming to level the playing field for domestic producers.
3. Focus on Long-Term Sustainability:
   • Stakeholders are urging policies to protect local manufacturers and ensure the sustainability of India’s steel production goals.

Conclusion

The surge in Chinese steel imports poses a dual challenge: supporting India’s growing infrastructure needs while protecting its domestic steel industry from unfair competition. Collaborative efforts between policymakers and industry leaders will be essential to address this pressing issue effectively.