The Indian steel industry will be looking for two key announcements from finance minister Nirmala Sitharaman in the upcoming Union budget – continued investment in infrastructure and a safeguard duty on the import of the alloy.

Steelmakers will also be looking for budgetary announcements around green steel, including incentives and enabling measures that nudge the industry towards higher sustainability.

Large domestic steelmakers including JSW Steel, Tata Steel, Jindal Steel & Power and ArcelorMittal Nippon Steel India are aggressively adding fresh capacities in anticipation of a healthy demand growth as the Indian economy marches ahead. The government is aiming for a domestic manufacturing capacity of 300 million tonnes of steel a year, up from 180 million tonnes at the end of FY24.

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India consumed about 136 million tonnes of steel in FY24, which was 14% higher than the previous year.

Steel imports

Rising imports of steel have been the biggest worry among domestic steelmakers over the past year. Inbound steel shipments grew 22% in 2024 to 9.2 million tonnes, led by a surge in imports from China and Japan.

While the volume of imports is small compared with India’s annual steel demand, inexpensive imports are disrupting the prices of domestic steel mills, which claim that the current price levels cannot sustain continued investment in capacity expansion.

Steelmakers have been lobbying the government for fresh restrictions on the import of the alloy from markets like China, which have increased shipments to India in the past year amid tepid demand from other key steel consumers.

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In December, India’s commerce ministry launched a safeguard investigation into the imports of alloy and non-alloy flat steel products following a formal complaint by Indian Steel Association, a lobby of large domestic steelmakers. The aim of the investigation is to ascertain whether the rising imports of steel are causing serious injury to the domestic industry. Based on the outcome of the investigation, the government can take World Trade Organization-compliant safeguard measures to restrict imports.

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The steel ministry and the Bureau of Indian Standards (BIS) have also introduced several quality control orders (QCO) that seek to restrict the sale of non-BIS compliant steel in the market. While the QCO will curb imports of substandard steel, India’s steel minister has maintained on record that the purpose of the order was not to restrict imports.