In response to the influx of low-quality steel, particularly from China, the Indian government is preparing to enhance quality control measures on steel imports. This move follows a recent review by the Ministry of Steel, which highlighted the growing threat posed to India’s domestic steel industry by global trade shifts.

Between April and August of the 2023 fiscal year, India became a net importer of steel, with total imports reaching 3.45 million tonnes, while exports stood at only 1.92 million tonnes. With weak global demand and high import tariffs in markets like the U.S. and the EU, international steel producers are increasingly viewing India as a dumping ground for cheap steel. This phenomenon has created significant challenges for India’s steel industry, prompting the government to take stronger policy measures to protect the local market.

Policy Background: Loopholes in Quality Control

   Currently, steel imports can enter the Indian market by obtaining a No Objection Certificate (NOC) from the Ministry of Steel, even for various types of steel that meet Quality Control Orders (QCOs). However, the government plans to restrict the issuance of NOCs, limiting them to steel categories that cannot be produced locally. According to official sources, of the 1,279 steel categories covered under QCOs, 1,127 are imported using NOCs. An official stated, “This loophole will soon be addressed by expanding the scope of QCO coverage.”

Additionally, India imports approximately 400,000 tonnes of steel annually that does not comply with Bureau of Indian Standards (BIS) certification, amounting to a value of around ₹42 billion. To address this issue, the government introduced a rule in October 2023 mandating that all non-BIS-certified imported steel must first receive approval from the Ministry of Steel. These measures demonstrate India’s effort to tighten its import standards to prevent an influx of substandard steel that could harm domestic industries.

Global Steel Market: Challenges and Opportunities for India

   India’s struggle with steel dumping is not an isolated incident. Many countries have implemented protective measures to shield their domestic steel industries from external shocks. The U.S., Canada, and the European Union have imposed protective tariffs of 25% on steel, while countries like Turkey, Indonesia, and Japan have adopted similar policies. India’s actions align with these nations’ efforts to guard against the impacts of global overcapacity, particularly as China’s steel production remains elevated.

In recent years, with fluctuating global steel demand, especially due to slowing economic growth in developed economies, developing markets have become key targets for international steel suppliers. As the world’s second-largest steel producer, India plays a dual role as a major exporter and a potential import target. Particularly as China’s steel production continues at high levels, its excess capacity is being dumped in the Indian market at reduced prices, placing tremendous pressure on domestic steel companies.

The Complex Dynamics of the Steel Industry

   India’s steel industry holds a crucial position in the global supply chain, boasting significant production capacity while also facing intense international competition. For years, the industry has been driven primarily by domestic demand, but with changes in the global economic landscape and a slowdown in local demand growth, the challenges for the sector are intensifying.

The plan to tighten steel import regulations indicates that India is actively adjusting its industrial policies to protect domestic manufacturing. This is not only aimed at preventing the influx of low-quality steel but also at creating opportunities for upgrading its manufacturing sector. By restricting certain steel imports, the Ministry of Steel can offer local producers some breathing space, encouraging them to enhance their technological capabilities and produce higher value-added steel products to meet the demands of more stringent markets.

   Simultaneously, the steel trade rivalry between India and China reflects broader economic competition between the two nations. As the world’s largest steel producer, China enjoys significant cost advantages. By dumping cheap steel into the Indian market, China can address its overcapacity issues while potentially suppressing the market share of local Indian manufacturers. While India’s stricter import controls may curb this dumping in the short term, the long-term solution for India’s steel industry lies in technological upgrades and product diversification to enhance its international competitiveness.

(IRuniverse, Kasumi)

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