- FTA nations leading exporters
- Imports from China on a declining trajectory
- Government’s make-in-India policy keeping imports in check
India’s steel imports fell by 6% year-on-year in FY’22 to around 3.74 million tonnes (mnt) from 3.98 mnt in FY’21, SteelMint data shows. Imports have been consistent over the last couple of years, although the numbers imports have fallen sharply compared to the 2017-19 period: for example, imports in FY’20 stood at 6.77 mnt, down from 7.84 mnt in FY’19 – a decrease of over 13%, as per Union Steel Ministry data.
Flat products including electrical and galvanised steel, hot-rolled coils and plates and cold-rolled coil comprise the largest share of imports. The share of imports of flat products in the country’s total imports was 95% in FY’22, up from 90% in FY’21.
On the other hand, imports of long steel products such as re-bar and steel wires dropped to around 166,000 t in FY’22 from 261,000 t in the preceding fiscal, while semis imports in the form of billets fell to around 10,000 t in FY’22 from 112,000 t in the previous fiscal.
FTA nations top exporters
Leading steel exporters to India in FY’22 remained South Korea and Japan at 2.08 mnt and 540,000 t respectively. India has free trade agreements (FTA) with both countries. Notably, imports from South Korea increased by over 12% y-o-y from 1.85 mnt in FY’21. South Korea’s share in India’s total imports rose from 46% in FY’21 to 55% in FY’22.
Japan’s share in total imports stood at around 14%, while China’s share dwindled from 13% in FY’21 to 10% in FY’22. Even as China remained the top non-FTA steel exporting country, shipments to India declined by over 27% y-o-y to 399,000 t from 547,000 t in FY’21, SteelMint data show. Among others, Taiwan and Germany were the other leading exporters to India.
Factors limiting imports
DMI&SP Policy: The Steel Ministry has declared time and again that in its role as a facilitator, the government has taken several steps to protect and promote the domestic steel industry, including the Domestically Manufactured Iron and Steel Products (DMI&SP) Policy for promoting procurement of made-in-India steel.
The government widened the applicability of the policy in 2021 to every project where the procurement value of iron and steel is above INR 5 lakh against INR 25 crore earlier.
As per the Steel Minister’s submissions in Parliament, the DMI&SP policy has till Dec’21 led to import substitution of more than INR 21,000 crore worth of steel, which implies that more and more domestic steel is being used in government procurement. Domestic steel has been defined as one which has been manufactured in India and has local content ranging from 20-50%.
ADD, CVD: Apart from the Steel Scrap Recycling Policy to enhance the availability of domestically generated scrap, the government has wielded regulatory mechanisms as anti-dumping duty (ADD) and countervailing duty (CVD) to address dumping of steel and distorted trade practices.
However, certain anti-dumping and countervailing duty on stainless steel and coated flat products, bars of alloy steel and high-speed steel was revoked by the Finance Minister recently in the larger public interest considering prevailing high prices of metals.
Steel Quality Control Order: The government has also issued Steel Quality Control Order to stop manufacturing and import of non-standardised steel and has come up with the Steel Import Monitoring System (SIMS) for advanced registration of steel imports.
The Department for Promotion of Industry and Internal Trade (DPIIT) issued the Steel and Steel Products (Quality Control) Order, 2020. This steel products draft quality control order seeks to tighten quality norms for steel, both imported and manufactured.
The quality order mandates the Bureau of Indian Standards (BIS) certification for steel products imports. The purpose of introducing the Order is to ensure quality steel products for the customer and also to strengthen the government’s current policy of keeping non-essential imports under check.
The government has also rolled out the Production-Linked Incentive (PLI) Scheme for specialty steel with an outlay of INR 6,322 crore to boost domestic manufacturing.
China factor
China factor: Notably, the steady reduction in inbound shipments from China has contributed to lowering India’s imports compared with the period between 2014 and 2017. China cancelled the value-added tax (VAT) of 13% on steel exports in a bid to augment domestic supplies. While this has greatly boosted the export potential of Indian steel majors, imports from China have fallen.
With steel production curbs in China being an essential decarbonisation strategy, it is unlikely that the country will resume steel exports in a big way and, therefore, India’s imports from China are unlikely to increase in the coming years.
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