Protectionist Policies Precipitate Plummeting Procurements

India's steel industry has witnessed a significant transformation in its import landscape during April-May 2025, with finished steel imports declining sharply by 27.6% compared to the same period last year. According to provisional government data, the world's second-largest crude steel producer imported just 0.9 million metric tons of finished steel during these two months, marking a substantial reduction in foreign steel entering the domestic market. This decline comes in the wake of India's implementation of a 12% temporary safeguard duty on certain steel imports in April, a strategic move specifically designed to curb the influx of inexpensive shipments predominantly originating from China. The protectionist measure appears to have achieved its intended effect, with Chinese steel shipments to India plummeting by 47.7% year-on-year during this period. Similarly, imports from Japan experienced an even more dramatic contraction, falling by 65.6% compared to the previous year. Industry analysts suggest this significant reduction in imports reflects not only the impact of the new tariff regime but also India's growing self-sufficiency in steel production and its determination to shield domestic manufacturers from what it perceives as unfair international competition. The government's intervention represents a calculated response to concerns about market distortions caused by subsidized steel production in certain exporting countries, particularly China, where state support has enabled producers to offer products at prices that Indian steelmakers struggle to match.

Korean Consignments Contradict Continental Contraction

Despite the overall downward trend in steel imports, South Korea has emerged as a notable exception, strengthening its position as India's primary source of finished steel during the April-May period. While shipments from China and Japan declined precipitously, South Korean steel exports to India increased by 8.2%, reaching 0.4 million metric tons. This counterintuitive growth amidst broader import contraction has raised questions about the factors enabling South Korean producers to maintain and even expand their market presence despite the implementation of India's safeguard duties. Trade experts suggest that preferential arrangements under the India-Korea Comprehensive Economic Partnership Agreement might be providing South Korean exporters with advantages that partially offset the impact of the new tariffs. Additionally, South Korean steel products may be perceived as offering superior quality or specialized characteristics that justify their continued importation despite higher costs. The data reveals that collectively, China, Japan, and South Korea accounted for 74.4% of India's total finished steel imports during this period, underscoring the continued dominance of East Asian nations in supplying India's supplementary steel requirements. Hot-rolled coils and strips emerged as India's most significant import categories, suggesting these products represent areas where domestic production capacity or specific quality requirements still necessitate foreign sourcing. The persistence of South Korean imports amid broader declines highlights the complex interplay between trade policies, bilateral agreements, and market dynamics in shaping India's steel trade patterns.

Manufactured Merchandise Manifests Metamorphosing Market

The transformation in India's steel trade extends beyond imports to encompass its export activities as well, creating a multifaceted picture of the country's evolving position in global steel markets. During April-May 2025, India maintained its status as a net importer of finished steel, with exports declining by 18.1% year-on-year to 0.8 million metric tons. This contraction in exports, coupled with the more substantial reduction in imports, suggests a reorientation toward serving domestic demand rather than international markets. Galvanized plain or corrugated sheets and coils constituted India's principal steel exports during this period, reflecting the country's manufacturing strengths in these value-added products. Belgium emerged as India's most significant export destination, with shipments increasing by 12.4% to reach 0.15 million metric tons, indicating growing demand for Indian steel products in certain European markets. Conversely, exports to Italy experienced a dramatic decline of 53.7%, while shipments to Nepal and Spain increased, illustrating the shifting geographical distribution of India's steel exports. These divergent trends across different export markets suggest that Indian steel products face varying levels of competitiveness and demand in different regions, with some markets becoming more receptive while others contract. The overall reduction in export volumes may also reflect increased domestic absorption of steel production to satisfy growing infrastructure and manufacturing requirements within India itself, potentially signaling a strategic pivot toward prioritizing domestic industrial development over export revenues.

Consumption Crescendo Catalyzes Capacity Creation

Amid the fluctuations in international trade, India's domestic steel market has demonstrated robust growth, with finished steel consumption reaching 25.1 million metric tons during April-May 2025, representing a healthy 7.1% increase compared to the same period last year. This expansion in consumption underscores the vitality of India's industrial and construction sectors, which continue to drive demand for steel products despite broader economic challenges. Paralleling this growth in consumption, India's crude steel production rose even more impressively, increasing by 9.5% to 26.9 million metric tons. This production growth outpacing consumption suggests that domestic steelmakers are not only meeting the expanding local demand but also potentially building capacity for future export opportunities or import substitution. The divergence between production and consumption growth rates indicates a strategic expansion of India's steel manufacturing capabilities, likely encouraged by government policies supporting the "Make in India" initiative and other industrial development programs. Industry observers note that this production increase comes amid significant investments in capacity expansion and technological upgradation by major Indian steel companies, positioning the sector for sustainable long-term growth. The government's National Steel Policy, which envisions India reaching a production capacity of 300 million metric tons by 2030, appears to be gaining traction as evidenced by these recent production figures. This expansion of domestic manufacturing capacity represents a crucial element in India's strategy to reduce dependence on imports and establish itself as a self-sufficient steel producer capable of meeting its developmental requirements.

Tariff Tactics Trigger Trade Transformation

The implementation of India's 12% safeguard duty on certain steel imports in April 2025 represents a pivotal development in the country's approach to managing its steel trade balance. This temporary tariff, specifically designed to address what Indian authorities perceived as a surge in underpriced imports, has evidently had a substantial impact on trade flows as demonstrated by the sharp decline in shipments from China and Japan. The measure reflects growing concerns among Indian policymakers and industry stakeholders about the potential damage to domestic manufacturers from steel imports priced at levels that domestic producers struggle to match due to different cost structures and potential subsidies in exporting countries. The safeguard duty follows a comprehensive investigation by Indian authorities that determined domestic producers were facing serious injury from the rapid increase in imports, particularly from certain Asian countries. Trade policy experts note that India's action aligns with similar protective measures implemented by other major economies, including the United States and European Union, which have also imposed various restrictions on steel imports in recent years. The targeted nature of India's response, focusing on specific product categories rather than implementing across-the-board tariffs, suggests a calibrated approach designed to address particular vulnerabilities in the domestic market while maintaining access to necessary imports. The provisional data indicating substantial reductions in imports from the primary targeted countries suggests the measure has achieved its immediate objective of providing breathing space for domestic producers. However, the long-term implications for India's steel industry, including potential responses from affected trading partners and impacts on downstream industries that utilize imported steel, remain subjects of ongoing assessment and debate among industry stakeholders.

Key Takeaways:

• India's finished steel imports fell 27.6% to 0.9 million metric tons during April-May 2025, with shipments from China dropping 47.7% & from Japan falling 65.6% following the implementation of a 12% safeguard duty.

• South Korea emerged as India's top finished steel supplier with shipments increasing 8.2% to 0.4 million metric tons, while China, Japan & South Korea collectively accounted for 74.4% of India's total steel imports.

• India's domestic steel consumption grew 7.1% to 25.1 million metric tons during April-May 2025, while crude steel production increased 9.5% to 26.9 million metric tons, indicating robust industrial activity & effective import substitution.