Mumbai: India's steel sector faced significant headwinds due to cheap imports and dumping from major global steel producers during 2023-24 and 2024-25, RBI's latest Bulletin said, as it called for policy support to boost the competitiveness of domestic steel production. An article published in the Reserve Bank's October Bulletin noted that steel imports have seen a surge, largely driven by lower import prices. This has adversely impacted the domestic steel production. "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," said the article titled 'Steel Under Siege: Understanding the Impact of Dumping on India'. India imported steel products to supplement its consumption demand. The country's iron and steel imports expanded by 10.7 per cent in the first half of 2024-25 and recorded a contraction in the second half of 2024-25, mainly due to safeguard duties.
India recorded a 22 per cent growth in its steel imports in 2023-24, fuelled by softer steel prices in the international market. India imports nearly 45 per cent of steel from the top five destinations -- South Korea (import share 14.6 per cent), China (9.8 per cent), the US (7.8 per cent), Japan (7.1 per cent) and the UK (6.2 per cent). Steel imports increased from China, Japan, South Korea, Indonesia and Vietnam during 2024-25, the article said. Further, it said India's steel consumption grew by 12.9 per cent 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 also 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," said the article authored by Anirban Sanyal and Sanjay Singh, officials in the RBI's Department of Statistics and Information Management. These factors have affected domestic market share, lowered capacity utilisation, and added pressure on domestic producers, it said, adding that the pricing strategies of exporting nations remain a concern for the steel industry. "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 said. According to the authors, the surge in imports has been primarily fuelled by lower import prices of steel, which in turn has adversely impacted domestic steel production.
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. With sluggish economic growth anticipated in China and other major steel-producing and consuming regions, the article added that cross-border trade in steel is being increasingly redirected to high-growth markets, including India. Further, the imposition of new tariffs on steel imports by the US enhances the threat of dumping, it said. The article is based on monthly data from April 2013 to March 2025. The unit value index (UVI) of iron and steel imports has been used to instrument the import intensity of steel and evaluate the impact of dumping.