Trump’s tariff threat on steel and aluminum has driven concerns of dumping in India, as global exporters redirect excess supplies. Domestic prices fall amid competition, prompting the government to impose anti-dumping and safeguard duties, upgrade monitoring systems, and introduce supportive measures like the PLI scheme to boost India’s steel sector.
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Trump’s tariff threat on steel and aluminium has raised fears in India of dumping and falling domestic prices.
Indian steel companies fear a downward pressure on domestic steel prices due to the risk of losing access to the US, which is the largest steel consumer market. They are also concerned about increased steel dumping in India as global exporters divert their products to other markets.
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In 2024, India exported 450 million worth of primary steel and 820 million worth of aluminum and related products to the US. The US imported only $2.83 million worth of steel pipes, tubes, and related products from India. |
Indian steel imports increased due to trade diversion and protectionist measures initiated when Trump imposed a 25% tariff on steel and a 10% tariff on certain aluminum products during his first term. This has led to a surge in steel imports from countries like China.
Increased tariffs may lead to low-cost Chinese dumping in India, heightening competition and creating downward pressure on domestic prices. This could negatively affect small Indian steel producers.
The Union Ministry of Steel requested the Union Ministry of Commerce to impose a 25% duty on steel products after steel imports from China surged by 80% to 1.61 million tonnes between January and July 2024.
It occurs when foreign producers sell steel in another country’s market at prices lower than their production costs or the prices they charge in their domestic market to capture market share and push domestic competitors out of business.
Steel dumping hurts the Indian domestic steel industry (2nd largest in world) by forcing local producers to lower their prices, which reduces their profit margins.
It also leads to job losses, unfair competition, and makes India overly reliant on cheap imported steel, which could disrupt supply chains in the future.
When foreign suppliers dump steel at extremely low prices, domestic producers are forced to lower their prices to remain competitive. This creates a price war, where companies compete on cost rather than quality or innovation, which results in declining profitability across the industry.
Price wars erode profits for major steelmakers like JSW Steel and SAIL, while smaller mills may face production cuts or job losses. This instability discourages long-term investments in the sector.
India has implemented several measures, including:
The Directorate General of Trade Remedies (DGTR) attached office of the Department of Commerce, the Ministry of Commerce & Industry investigates cases of suspected dumping and recommends anti-dumping or safeguard duties to the government.
India saw a surge in steel imports due to global trade dynamics, such as U.S. tariffs on steel, which have redirected exports to India. Countries like China, Japan, and South Korea are dumping excess steel into the Indian market.
The Production Linked Incentive (PLI) Scheme encourages investments in specialty steel production to boost India’s manufacturing capabilities and reduce reliance on imports.
The National Steel Policy aims to increase domestic steel production and consumption, and to make India a global leader in steel manufacturing.
The Ministry of Steel introduced 16 safety guidelines in July 2024 to improve productivity by standardizing safe operational practices.
The Steel Import Monitoring System (SIMS) was upgraded to SIMS 2.0 in July 2024 to monitor imports more effectively.
The government has issued 145 Steel Quality Control Orders to prevent the manufacturing and import of non-standardized steel.
The government has announced a Steel Scrap Recycling Policy to increase the availability of domestically generated scrap.
The future of the steel sector looks optimistic due to rising domestic demand, urbanization, and infrastructure development. The sector is focusing on adopting new technologies, improving energy efficiency, and producing value-added steel products to compete globally.
India aims to become a global leader in steel production and a reliable supplier to the world market, while ensuring sustainable growth and competitiveness.
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PRACTICE QUESTION Q. Explain the concept of dumping in international trade. How does steel dumping affect Indian manufacturers? 150 words |
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