Steel Sector in India: regulations and criteria

Steel has been a crucial factor in industrialization and is regarded as a cornerstone of economic growth.

Serving as both a raw material and an intermediate product, its production and usage indicate a country's development.

The steel industry in India is classified into three types: major producers, primary producers, and secondary producers.

Current Situation

India ranks as the second largest producer of crude steel globally, following China, with an output of 144.3 million tonnes of crude steel in the fiscal year 2023-24.

In 2023-24, India was a net importer of finished steel, exporting 7.49 million tonnes and importing 8.32 million tonnes.

The steel industry plays a crucial role in India’s economy, accounting for approximately 2% of GDP.

Phases

The Indian Government has initiated the Purvodaya programme to speed up the growth of eastern India by creating a unified steel hub.

The National Steel Policy of 2017 aims for a production capacity of 300 million tonnes by 2030-31.

In the Union Budget 2024-25, Basic Customs Duty (BCD) has been lowered from 2.5% to zero on Ferro-Nickel and Molybdenum ores and concentrates, essential raw materials for the steel sector.

The BCD exemption on Ferrous Scrap and designated raw materials for the production of CRGO steel has been extended until 31.03.2026.

Execution of the Domestically Manufactured Iron & Steel Products (DMI&SP) Policy to encourage ‘Made in India’ steel for government purchases.

Initiation of the Production Linked Incentive (PLI) Scheme for Specialty Steel aims to boost the production of 'Specialty Steel' domestically and decrease imports by drawing in capital investments.

Redesigning the Steel Import Monitoring System (SIMS) 2.0 for enhanced oversight of imports to respond to the issues of the local steel sector.

Implementation of the Steel Quality Control Order, which prohibits the sale of substandard or defective steel products in the domestic market and for imports, to guarantee the supply of quality steel to the industry.

Obstacles and Issues

India's steel sector is encountering significant difficulties due to an influx of inexpensive Chinese exports, negatively impacting both local prices and export competitiveness.

Indian steel producers caution that without protective actions such as safeguard duties, India may turn into a dumping site for excess steel worldwide.

The insufficient government backing and sudden enforcement without proper notification have attracted significant criticism from industry participants.

Path Ahead

The steel sector has become a key focal point due to the reliance of various industries on its production as India aims to establish itself as a manufacturing leader through initiatives such as Make in India.

Even with significant exports from China, India continues to be a robust growth market.

India should actively adopt protective measures to lessen its dependence on imports and encourage local steel production to achieve self-sufficiency and sustained competitiveness.