Rising Steel Imports Under FTA In India Pose Challenges For Domestic Steel Industry

India’s steel industry is facing challenges as finished steel imports under free trade agreements (FTA) continues to rise. The Indian Steel Association (ISA) has reported a 21% increase in imports of finished steel in 2022 compared to 2022. Imports increase has put pressure on the domestic industry, which is already grappling with supply chain issues and rising raw material prices.

Indian Steel Industry’s Concerns

The increase in imports of finished steel is particularly concerning for the Indian steel industry as it is being exported by FTA countries at prices lower than their domestic prices, which is a form of dumping. The ISA has been vocal in raising concerns about the impact of cheap imports on the domestic industry and has been calling for stronger measures to protect it.

Indian Steel Industry’s Challenges

One of the major challenges faced by the Indian steel industry is the rising cost of raw materials, particularly coking coal, which has registered a sharp increase of 55% from $240-250/ton on 1 December 2022, to $350-355/ton on 15 February 2023. This increase in raw material costs has further exacerbated the pressure on the domestic industry, making it difficult for them to compete with cheap imports.

Indian Steel Industry’s Struggles

The rise in steel imports under FTA is not a new phenomenon in India. In recent years, the country has seen a significant increase in steel imports from countries like Japan, South Korea, and China, which are exporting steel to India at prices lower than their domestic prices. This has led to a situation where the domestic industry is struggling to compete, resulting in plant closures, job losses, and an overall decline in the sector. 

Stronger Measures To The Rescue 

To address this challenge, the ISA has been calling for stronger measures to be put in place to protect the domestic industry. These measures include higher import duties, the imposition of anti-dumping duties, and the use of safeguard measures. The Indian government has also announced a new Steel Scrap Recycling Policy in 2022, which aims to reduce the dependence on imported scrap and increase the recycling of domestic scrap. 

Insight

The Indian steel industry is already facing supply chain issues and rising raw material prices, and the increase in cheap imports is exacerbating these challenges. The government and industry stakeholders need to work together to find solutions that will protect the domestic industry and ensure its long-term sustainability.

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