Markets

Indian Steelmakers Gain as Import Duties Continue and China Cuts Supply

Ongoing Import Tariffs and Reduced Chinese Steel Output Offer New Opportunities for Domestic Producers. Indian Steel Industry Positioned for Growth Amid Protective Policies and Rising Demand.

Import Duties Shielding Indian Steel Industry
India’s steel industry is entering a favorable phase as government policies continue to shield domestic players from foreign competition. In early 2025, the government extended a 12% safeguard duty on specific steel imports, a measure designed to protect local mills from cheap inflows, especially from China.
The duty has created breathing space for India’s small and medium-sized producers, who often struggle to compete against low-cost imports. By limiting the penetration of foreign steel, particularly hot-rolled coils and other key products, the safeguard measure is helping Indian companies consolidate their position in the domestic market. Policymakers have also hinted at the possibility of raising tariffs further, to 24%, should import pressures intensify.
This protectionist environment, while debated internationally, is being viewed domestically as critical for enabling Indian producers to achieve scale, modernize facilities, and prepare for future competition on stronger footing.

China’s Reduced Steel Supply and Its Impact
Globally, the steel supply landscape is also shifting. China’s steel output, which dominates the global market, has seen a slowdown. From January to May 2025, China’s steel output declined by 1.7% year-on-year.
Although China’s steel exports to other countries have ticked upward, the reduced domestic output has tightened overall supply.
For India, this situation provides a dual advantage: reduced risk of Chinese oversupply driving down global prices and stronger support for domestic steel pricing. Analysts note that while China remains the largest steel producer, its moderated production levels post-pandemic are creating space for other markets—including India—to expand their footprint and enhance competitiveness.

Steel Demand Rising Amid Domestic Infrastructure Push
Domestic demand continues to drive India’s steel growth, with the sector expected to expand by 8–10% in 2025, supported by the government’s infrastructure-focused development push.
Key initiatives such as the National Infrastructure Pipeline (NIP), PM Gati Shakti master plan, and affordable housing projects are driving steel-intensive construction activity. Rapid urbanization and the growth of new industrial corridors further reinforce long-term demand.
Additionally, the government’s directive to prioritize the use of ‘Made in India’ steel in public sector projects ensures a steady pipeline of orders for local producers. This policy not only creates assured demand but also aligns with India’s broader self-reliance (Atmanirbhar Bharat) objectives.

Market Dynamics: Pricing and Supply Challenges
Despite strong demand indicators, steel prices in India faced some volatility in mid-2025. Global steel prices weakened due to softer international demand, while the domestic market saw a seasonal slowdown linked to the monsoon period, when construction activity typically dips.
Moreover, Chinese-origin imports, particularly hot-rolled coil (HRC), have become cheaper, creating renewed concerns of a potential surge in inflows. Indian authorities, however, are monitoring the situation closely. The existing safeguard duty, alongside discussions of higher tariffs, is intended to prevent the domestic market from being swamped by underpriced imports.
This delicate balance between ensuring affordable steel for end-users and protecting local manufacturers will remain a defining feature of India’s steel policy in the near term.

Industry Capacity and Future Prospects
By mid-2025, India’s steel production capacity rose to 205 million tons per year, firmly establishing it as the world’s second-largest producer after China.
The government aims to expand this to 300 million tons by 2030, supported by both public and private sector investments.
Challenges remain. India’s steel sector depends heavily on imported coking coal, a key input for production, making it susceptible to price volatility. The industry also faces limitations from inadequate scrap metal availability.
However, the industry is moving forward with modernization drives, digitalization, and green steel initiatives, aligning with global sustainability goals. Investments in hydrogen-based steelmaking and energy-efficient processes are expected to reduce carbon footprints while enhancing competitiveness.

Positive Stock Market Outlook
Equity markets have responded positively to these structural shifts. Shares of leading steelmakers like Tata Steel, JSW Steel, and SAIL have seen renewed interest, with investors factoring in improved pricing power, volume growth, and stronger policy support.
Infrastructure-driven demand is also expected to benefit ancillary sectors such as construction materials, engineering firms, and logistics providers. Together, these linkages create a multiplier effect, positioning the steel sector as a vital driver of India’s broader economic growth.
Analysts suggest that if current policies and demand trends continue, Indian steelmakers are well-placed to deliver robust earnings growth over the next several years, solidifying their global position.

Conclusion
With import duties continuing and China cutting back supply, Indian steelmakers find themselves in a uniquely advantageous position. Domestic demand, bolstered by massive infrastructure spending and government support for local production, is providing a solid growth foundation.
Although challenges such as input costs and potential import competition remain, the sector’s trajectory appears strong. As India works toward its 2030 steel capacity goals, the combination of protectionist policies, rising demand, and industry modernization suggests that the domestic steel industry is set to remain a key pillar of the country’s industrial growth story.

The image added is for representation purposes only