Following the United States announcement of a 25% across-the-board steel tariff and aluminum product tariffs, India has also set its sights on Chinese steel. According to a report by Reuters on February 12, H.D. Kumaraswamy, Minister of India's Ministry of Steel, said that due to the "severe challenge" posed by imported Chinese steel to domestic producers in India, India may impose a 15% to 25% temporary tariff on steel from China within six months at the earliest.
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In an interview with Reuters on the 12th, Kumaraswamy pointed out that the growth in China's steel exports is often accompanied by unfair trade practices, which has put huge pressure on India's steel manufacturers. To prevent such unfair competition and create a fair market environment, the Indian government is considering imposing tariffs on Chinese steel.
He further explained that the tax rate is based on the results of an investigation launched by the Indian government in December last year. Reuters reported that once this tax increase measure is approved and implemented, it may last up to two years. Data shows that in the 2023/24 fiscal year ending in March last year, India became a net importer of finished steel products. Among them, the steel products imported from China were nearly 2.7 million tons, accounting for one-third of the total steel imports in India, with a year-on-year increase of as high as 91%. Especially from April to December 2024, the volume of finished steel products imported by India from China also reached a historical high.
According to Reuters, due to the surge in imports, although India's economy is growing rapidly, infrastructure spending is increasing continuously, and the local demand for steel remains strong, the domestic steel price has declined. The report said that in December last year, some small steel mills in India had to scale back their operations and consider layoffs.
Insiders pointed out that the newly announced across-the-board steel tariffs and aluminum product tariffs by US President Trump will cause steel manufacturers to seek new markets, which may aggravate the problems faced by Indian steel manufacturers.
The Indian government and representatives of the steel industry discussed the issue of steel tariffs in a recent meeting. Mysteel has learned that the Indian government intends to impose a temporary safeguard tax of up to 25% on steel imports to restrict the inflow of Chinese steel products and reduce import dependence. This move is aimed at supporting the development of local steel producers in India and weakening the competitiveness of steel products from China.
In order to ease the concerns of small and medium-sized downstream enterprises, India's major steel enterprises, including JSW Steel, Tata Steel and ArcelorMittal Nippon Steel India, have agreed to offer preferential steel prices to these enterprises. According to the Engineering Export Promotion Council of India, registered small and medium-sized enterprises can purchase raw materials at an export price 20% lower than the market price. This move is expected to significantly reduce the procurement costs of small producers who consume about 1 million tons of steel annually.
"Given that South Korea and Japan have signed free trade agreements with India and can enter the Indian market duty-free, the import pressure from South Korea and Japan may increase in the 2026 fiscal year, as they need to find alternative markets for the goods that have so far been shipped to the United States," said ICRA, an Indian rating agency, in a report on the 12th. "This may put pressure on domestic steel prices and further reduce the industry's earnings in the 2026 fiscal year."
In addition, the report mentioned that the global steel market is facing low demand and India's steel exports have declined in recent months, which also poses greater challenges for manufacturers. The financial report of JSW Steel, India's largest steel manufacturer, for the third quarter of 2024, released last month, showed that the company's profit decline was greater than expected.
Indian media reported earlier that the booming economic activities and broader infrastructure transformation in India have driven steel manufacturers to increase investment and improve production capacity. According to The Economic Times of India, India aims to triple its domestic steel production capacity to 500 million tons per year by 2047.
