India's steel sector faces significant headwinds due to cheap imports: RBI Article

An article published in the Reserve Bank of India’s (RBI) October Bulletin has said that India's steel sector faced significant headwinds due to cheap imports and dumping from major global steel producers during 2023-24 and 2024-25. It called for policy support to boost the competitiveness of domestic steel production. It noted that steel imports have seen a surge, largely driven by lower import prices.

This has adversely impacted the domestic steel production. It said the dumping of cheap steel from global producers may pose a risk to the domestic steel production, which can be mitigated through suitable policy measures. The recent initiative to impose the safeguard duty provides insulation against the import dumping.

The article said steel imports increased from China, Japan, South Korea, Indonesia and Vietnam during 2024-25. Further, it said India's steel consumption grew by 12.9% on average (average of monthly growth rates) from April 2022 to November 2024. The gap between domestic consumption and production has widened since 2022. It noted that steel prices have eased since April 2022, both on the domestic and global fronts.

In recent times, India's steel sector has encountered challenges due to increased imports and competitive pricing from major steel-producing countries. It noted that these factors have affected domestic market share, lowered capacity utilisation, and added pressure on domestic producers and the pricing strategies of exporting nations remain a concern for the steel industry. It said addressing these challenges calls for a balanced approach, including policy support and initiatives to enhance the competitiveness of India's steel production through innovation, cost efficiency, and sustainable practices.

It further said India imported steel products to supplement its consumption demand. The country’s iron and steel imports grew by 10.7% in the first half of the 2024-25 financial year, mainly due to safeguard duties. India recorded a 22% growth in its steel imports in 2023-24, fuelled by softer steel prices in the international market. India imports nearly 45% of steel from the top five destinations -- South Korea (import share 14.6%), China (9.8%), the US (7.8%), Japan (7.1%) and the UK (6.2%). The central bank said the views expressed in the article are those of the authors and do not reflect the views of the Reserve Bank of India.