Steel shock: RBI says dumping and cheap imports hurting Indian producers

India’s steel industry has come under pressure due to a surge in cheap imports and dumping by leading global steel producers, according to an article published in the Reserve Bank of India’s (RBI) October Bulletin. The report, titled “Steel Under Siege: Understanding the Impact of Dumping on India,” highlights the urgent need for policy support to protect domestic production and ensure competitiveness in the global market.

The article noted that India’s steel imports have risen sharply in recent years, driven largely by lower import prices. This increase has adversely affected domestic output and market share, with local producers facing intense competition from cheaper overseas supplies.

“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 import dumping,” the article stated.

Rising imports and market imbalance

India’s iron and steel imports grew by 22 per cent in 2023–24, fuelled by falling international prices. In the first half of 2024–25, imports expanded by 10.7 per cent before slowing in the second half due to the imposition of safeguard duties.

Nearly 45 per cent of India’s steel imports come from five major countries — South Korea (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). Imports from China, Japan, South Korea, Indonesia, and Vietnam rose further in 2024–25.

At the same time, India’s domestic steel consumption recorded average monthly growth of 12.9 per cent between April 2022 and November 2024, widening the gap between consumption and production.

Pricing pressure and global trends

Steel prices have eased since April 2022 both in India and globally, exerting additional pressure on Indian producers. According to the RBI authors, Anirban Sanyal and Sanjay Singh from the central bank’s Department of Statistics and Information Management, the influx of cheaper imports has eroded domestic market share and reduced capacity utilisation.

“In recent times, India’s steel sector has encountered challenges due to increased imports and competitive pricing from major steel-producing countries,” they wrote, noting that these developments have strained domestic producers’ profitability and competitiveness.

Policy response and future risks

The authors called for a “balanced approach” combining policy support, innovation, and sustainable practices to strengthen India’s steel industry. They argued that cost efficiency and technological advancement are essential to withstand external shocks from global price fluctuations and import dumping.

The article also warned that sluggish economic growth in China and other major steel-producing regions could redirect excess global supply towards high-growth markets like India, intensifying the risk of dumping. Additionally, new US tariffs on steel imports could further exacerbate the issue.

While the RBI clarified that the opinions expressed in the article are those of the authors and not the central bank itself, the analysis underscores the growing vulnerability of India’s steel sector to external trade pressures and the importance of a strong industrial policy response.

The study used monthly data spanning April 2013 to March 2025, employing the Unit Value Index (UVI) of iron and steel imports to assess import intensity and the impact of dumping on India’s domestic market.
(With PTI inputs)