By Neha Arora and Mayank Bhardwaj
NEW DELHI (Reuters) – India could impose a temporary tax of 15%-25% on steel from China in as soon as six months because of the “serious challenge” to domestic producers from cheap imports, Steel Minister H.D. Kumaraswamy said.
“Rising Chinese steel imports, often aided by unfair trade practices, pose a serious challenge to Indian manufacturers,” Kumaraswamy told Reuters in an interview late on Tuesday. “The government is resolute in its commitment to protecting the Indian steel industry,” Kumaraswamy added.
New Delhi began an investigation in December into whether to impose a temporary tax, known locally as a safeguard duty, to curb steel imports. If adopted, it could remain in force for as long as two years.
“Based on ongoing investigations, safeguard duties in the range of 15-25% are being considered to prevent unfair competition and ensure a level playing field,” the minister said.
India became a net importer of finished steel in the fiscal year ending March 2024, and shipments from China reached a record high between April and December.
As a result, despite robust local demand as a result of rapid economic growth and rising infrastructure spending in the world’s fastest-growing major economy, domestic steel prices have slumped.
Some of India’s smaller mills have had to scale down operations and consider job cuts as a result of the import surge, Reuters reported in December.
Industry insiders say U.S. President Donald Trump’s sharp tariff increases on steel imports could exacerbate the problems as exporters look to ship to India instead.
“Given their duty-free access on account of the free trade agreements (FTA) with India, import pressures from South Korea and Japan could increase in FY2026 as they search for alternate markets for their hitherto American cargoes. This can exert pressure on domestic steel prices, pulling down the industry’s earnings further in FY2026,” ratings agency ICRA said in a note on Wednesday.
India’s steel exports have also slumped in recent months, primarily due to sluggish global demand, exacerbating the challenges faced by India’s leading steelmakers such as JSW Steel, Tata Steel, and Jindal Steel and Power.
JSW Steel, India’s biggest steelmaker, reported a larger than expected decline in October to December profit, its fiscal third-quarter, last month.
“While short-term challenges have impacted steel exports, the government is actively working on expanding market access,” Kumaraswamy said, alluding to India’s efforts to find new markets for its steel.
India was looking to sell its steel to Africa, the Middle East, and Southeast Asia, he said, adding that manufacturers had shifted towards producing high-value, specialised steel. High-grade steel can command higher prices and the competition from China is less intense.
India is also looking to diversify sources of steel-making raw materials such as coking coal, Kumaraswamy said, looking towards Canada, Russia, Mongolia, Mozambique, and the United States.
Australia was the main supplier of coking coal to India in the last decade, accounting for about 80% of all such shipments. Its share dropped to 62% in 2024, as supplies from the U.S. as well as Russia and Mozambique helped India to diversify.
The minister also said the government would roll out a production-linked incentive programme to encourage low-carbon steel production.
India would require an estimated investment of $20-25 billion for its steel sector’s decarbonisation, with the transition funded through green bonds, concessional financing, and public-private partnerships, the minister said.
(Reporting by Neha Arora and Mayank Bhardwaj; Additional reporting by Manvi Pant in Bengaluru; Editing by Kate Mayberry)
