Chinese Steel Undercuts Indian Market Amid Tariff Uncertainty
India’s steel industry is facing renewed pressure from an influx of low-cost Chinese steel, with imported prices undercutting domestic rates by as much as 12%. This aggressive pricing has sparked alarm within the industry, threatening the profitability and sustainability of Indian steel producers, particularly small and medium-sized enterprises already operating on thin margins.
Chinese imports shake domestic steel sector
Industry bodies have raised red flags over the surge in cheap imports, warning that it is causing serious injury to domestic manufacturers. The Indian Steel Association (ISA) has reported a sharp drop in profit margins, with declines ranging between 68% and 91% in the current fiscal year. The association has called for urgent government intervention to curb the tide of underpriced steel entering the Indian market.
Centre proposes safeguard duty amid industry pushback
In response, the government has proposed a 12% safeguard duty on steel imports for a period of 200 days. While industry players had anticipated a higher tariff between 15% and 25%, the proposed duty is seen as a preliminary step to mitigate the damage. Authorities indicated that this measure aims to counter trade diversion effects caused by similar protective actions in other countries and to provide temporary relief to Indian manufacturers.
Further escalation appears likely, with the Indian Alloy Steel Producers’ Association preparing to file an anti-dumping petition targeting Chinese imports of alloy and special steel bars and rods. The association has expressed concern over the persistent rise in such imports, calling for stronger protective mechanisms to shield the domestic sector.
Global trade shifts deepen Indian market pressure
The issue is compounded by shifting global trade dynamics. New tariffs imposed by the United States on steel and aluminum are expected to redirect surplus global supply toward markets like India. Analysts are predicting a correction of around ₹3,000 per ton in steel prices, adding more strain to already struggling domestic firms.
Leading Indian producers such as Tata Steel and JSW Steel have already reported declines in profitability. Tata Steel saw its net profit fall by 36% in the quarter ending December 2024, even as domestic sales volumes rose. JSW Steel also recorded a drop in profits, attributing it to reduced steel prices driven by the import surge.
With over 2.5 million workers directly or indirectly employed in the steel industry, the economic and social implications of continued pressure from imports are significant. Industry leaders are urging swift and decisive policy action to ensure the sector’s resilience and to prevent long-term erosion of domestic production capabilities.
