India’s steel expansion plans face setback as cheap imports hit local mills

A wave of low-cost steel imports is squeezing India’s domestic producers, pushing hundreds of smaller mills to the brink and threatening the government’s ambitious expansion plans for the sector, Bloomberg reported, citing a senior official.

Around 150 mills have shut down and another 50 have scaled back production as local steel prices slump to near five-year lows, Steel Ministry Secretary Sandeep Poundrik said at an industry conference in New Delhi on Tuesday. Nearly half of India’s total steel output comes from small and medium-sized units, which are now struggling to stay viable.

“All players are facing problems,” Poundrik said. Even larger producers such as JSW Steel Ltd. have seen their profit margins erode, he added. The government, he said, is tightening quality checks to prevent the inflow of substandard steel into Indian markets.


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Steel consumption has been surging on the back of massive infrastructure projects and a strong economy, which should have been a windfall for Indian manufacturers. But the demand boom has instead drawn in cheaper Chinese steel, flooding the market and undercutting domestic prices.

“Price is a problem when we need to invest in 100 million tons of capacity,” Poundrik said, noting that such expansion would require about $100 billion in investment. Sustaining that level of funding, he warned, would be difficult if prices remain depressed.

India, the world’s second-largest steel producer, has already joined several countries in imposing trade curbs to protect its domestic industry. The government currently levies a 12% temporary safeguard duty on a wide range of steel products to counter cheap imports, mostly from China.

The duty, however, is set to expire this week, with no clarity yet on its renewal. The country’s trade authority has recommended a three-year extension, but a final decision is still pending.