The Indian steel sector is currently grappling with a significant challenge as Steel Secretary Sandeep Poundrik reveals that approximately 62% of steel imports are entering the country at zero duty through Free Trade Agreement nations. This situation has created a complex scenario where traditional protective measures, such as duty hikes, may prove ineffective in addressing the domestic industry's concerns.
The first half of the 2024-25 financial year has witnessed a dramatic shift in India's steel trade dynamics, with imports surging by 41% while exports declined by 36%. The import figures have reached 5.51 metric tons during April-September 2024-25, showing a substantial increase from 3.66 metric tons in the corresponding period of the previous year. Particularly noteworthy is the surge in Chinese imports, which have risen to 1.85 metric tons from 1.02 metric tons in the same period.
The situation has become increasingly concerning for domestic steel manufacturers who are facing competitive pressures from cheaper imports. The industry's calls for increased customs duty protection face a significant hurdle due to India's existing FTA commitments with various nations, including Japan, South Korea, Mauritius, and the ASEAN bloc. These agreements effectively nullify any potential impact of duty increases on a majority of incoming steel shipments.
Steel Secretary Poundrik acknowledges the genuine nature of the problem facing the industry, particularly the supply glut caused by increased imports. The ministry is actively exploring multiple protective measures for the domestic industry, but the FTA constraints present a significant challenge in implementing effective solutions. The situation is further complicated by international dumping concerns and declining global steel prices.
The impact of this trade dynamic is being felt across the Indian steel sector, with domestic producers struggling to maintain their market share and profitability. The significant increase in imports, particularly from China, has created additional pressure on local manufacturers who must compete with potentially below-cost shipments while maintaining their production standards and employment levels.
The current scenario highlights the complex interplay between international trade agreements and domestic industry protection. While FTAs are designed to promote trade and economic cooperation, they can sometimes create unexpected challenges for specific sectors. The steel industry's situation demonstrates how these agreements can limit a government's ability to implement protective measures even when domestic industries face significant pressure.
The ministry's approach to this challenge requires a delicate balance between honoring international trade commitments and protecting domestic industry interests. Officials are now exploring alternative strategies beyond traditional duty mechanisms to address the industry's concerns, recognizing that conventional protective measures may not be sufficient in the current trade environment.
