In 2024, India’s steel imports have seen a sharp increase, adding pressure on the domestic steel industry, which is crucial for infrastructure and industrial growth. According to recent data, the country imported 4.735 million metric tons of steel in the first half of fiscal year 2024-25, marking a 41.3% increase from the same period last year, when imports totaled only 3.329 million metric tons. While these volumes still account for a small portion of the country's total steel consumption, the influx of cheaper imported steel has significantly impacted domestic steel prices, causing depression in the market. This increase in imports is a growing concern for both large and small steel producers in India, as they struggle to compete with the influx of low-cost foreign steel.
India's steel industry is marked by a dual structure: large integrated producers and a vast network of small producers. In the fiscal year 2023-24, 58.93 million metric tons (40.84%) of steel was produced by over 1,000 small producers, while the remainder, 85.37 million metric tons (59.16%), came from large integrated steel producers. This data highlights the crucial role of small producers, who, despite their smaller scale, contribute significantly to the national production. These smaller producers are particularly vulnerable to fluctuations in steel prices, as they are less able to absorb the shock of imported steel, which is often priced lower than locally produced steel due to global dumping practices.
The surge in imports, while not yet large in comparison to domestic consumption, poses a direct challenge to the National Steel Policy. This policy aims to increase India's steel production capacity to 300 million metric tons by 2030, up from the current capacity of approximately 180 million metric tons. Achieving this target will require an estimated investment of $120 billion (approximately ₹10 lakh crore). However, this growth may be hampered if domestic steel prices continue to be depressed by cheaper imports. The policy’s goal also includes fostering a competitive domestic steel industry capable of meeting the increasing demand for steel in infrastructure and manufacturing. India’s steel consumption grew by 13.5% in the first half of 2024-25, and even with conservative estimates of a 10% annual growth, the country will require substantial additional production capacity to meet the demand forecast of 265 million metric tons by 2030.
To address these challenges, the Ministry of Steel and the Bureau of Indian Standards are working together to ensure that only high-quality steel is produced domestically or imported into the country. The BIS has set up 151 quality standards covering 1,376 grades of steel, which are regulated under the Quality Control Orders. These measures are designed to prevent the entry of substandard steel into the market, which could hurt both consumer safety and the profitability of domestic producers. Steel producers wishing to import material not covered by existing BIS standards must first obtain a No Objection Certificate from the Ministry of Steel. This step ensures that only steel that meets necessary standards is allowed to enter the market.
However, the Ministry has noticed an increasing trend where traders and manufacturers attempt to import steel by presenting minor modifications to existing steel grades, thereby circumventing BIS regulations. In 2023-24 alone, there were applications for 1,136 new steel grades, many of which were not internationally recognized or were only slight variations in composition or measurements. The Ministry is concerned that such tactics are being used to import cheaper steel, undermining the integrity of the domestic industry. As of October 31, 2024, the Ministry received 735 applications for NOCs from Japan, granting 594 approvals while rejecting 141 applications for failing to meet regulatory norms.
The concern over cheap imports is particularly urgent for small producers, who may struggle to compete with the influx of low-cost steel, affecting their ability to invest in technology or improve production processes. These market pressures can also have broader economic implications, as the steel industry is a key driver of infrastructure development, including construction and manufacturing. If the steel sector becomes reliant on imports, India risks becoming a net importer of steel, which would pose a significant challenge to its infrastructure goals.
To mitigate these issues, the Ministry of Steel has reaffirmed its commitment to monitoring imports and ensuring that only quality steel enters the market. The Ministry is using its online portal to process NOC applications efficiently, while also cracking down on attempts to bypass the system. This is part of a broader effort to protect India’s steel producers from unfair competition and to maintain the integrity of the domestic market.
Despite these efforts, the issue of cheap steel imports remains a challenge that requires continued vigilance. The Ministry of Steel's initiatives to curb the import of substandard materials and to promote investment in the domestic industry are critical for safeguarding India’s steel production capacity. As India continues to grow its steel production to meet future demand, these policies will play a key role in ensuring that the country remains self-sufficient in steel, able to meet the needs of its rapidly expanding infrastructure and manufacturing sectors.
