India considers 15-25% tax on Chinese steel imports
India's Steel Minister H.D. Kumaraswamy announced the country's consideration of imposing a temporary tax ranging from 15% to 25% on steel imports from China. This action is in response to the "serious challenge" cheap imports pose to domestic producers, Reuters reported.
The potential safeguard duty aims to curb the influx of Chinese steel and could be enforced for up to two years to ensure fair competition and a level playing field for Indian manufacturers.
The investigation into the imposition of the safeguard duty began in December, following a surge in steel imports from China, which contributed to India becoming a net importer of finished steel in the fiscal year ending March 2024.
Despite robust local demand fueled by economic growth and infrastructure spending, domestic steel prices have fallen, pressuring smaller mills to consider scaling down operations and job cuts.
The situation is further complicated by global trade shifts, such as the U.S. tariff increases on steel imports under President Donald Trump, which may redirect exports to India. Additionally, free trade agreements with South Korea and Japan could lead to increased import pressures in FY2026, potentially impacting domestic steel prices and earnings, as noted by ratings agency ICRA.
India's steel exports have also declined due to sluggish global demand, affecting major steelmakers like JSW Steel (NSE: JSTL ), Tata Steel (NSE: TISC ), and Jindal Steel and Power. JSW Steel reported a larger than expected decline in profit for the October to December quarter.
In response to these challenges, Minister Kumaraswamy highlighted the government's efforts to expand market access for Indian steel, targeting regions such as Africa, the Middle East, and Southeast Asia.
The focus is also shifting towards producing high-value, specialized steel, which faces less competition from China and can command higher prices.
To further strengthen the steel industry, India is diversifying its sources of raw materials like coking coal, reducing its reliance on Australia, and looking towards other countries including Canada, Russia, Mongolia, Mozambique, and the United States.
The government also plans to introduce a production-linked incentive program for low-carbon steel production and will seek investments of $20-25 billion for the sector's decarbonization, potentially funded through green bonds, concessional financing, and public-private partnerships.
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