[SMM Hot Topic] India Plans to Impose 15%-25% Tariffs on Steel Products Imported from China: What Are the Reasons Behind It?

[SMM Hot Topic] India Plans to Impose 15%-25% Tariffs on Steel Products Imported from China: What Are the Reasons Behind It?

• Background of India's Tariff Hike on Chinese Steel
• February 10, 2025The comprehensive steel and aluminum tariffs newly announced by US President Trump on February 10 are expected to push steel manufacturers to seek new markets. As India is currently one of the few major markets without trade restrictions, this may exacerbate the challenges faced by Indian steel producers.

February 12, 2025

• As a result, according to the latest reports, Indian Minister of Steel H.D. Kumaraswamy stated on February 12 that due to the "severe challenges" posed by Chinese steel imports to domestic producers, India may impose provisional tariffs of 15%-25% on Chinese steel within six months.December 2024

Since December last year, the Indian government has been investigating whether to impose provisional safeguard tariffs on Chinese products to limit steel imports. Reportedly, if the proposal for provisional tariffs is approved, its validity may last up to two years.

• Exports: India's Steel Exports to the US Account for 23.64%, Leading by a Wide MarginAccording to data from India's Ministry of Commerce and Industry, India's main steel export destinations in 2023 were the US, the UAE, Saudi Arabia, and Canada, accounting for 22.34%, 8.24%, 6.51%, and 3.58% of its total exports, respectively. From January to November 2024, these figures were 23.64%, 9.85%, 8.81%, and 4.16%, respectively.

Table 1 - Major Destinations of India's Steel Exports, January-November 2024           

Table 2 - Major Destinations of India's Steel Exports, 2023

In the first 11 months of 2024, India's total steel exports to the US reached 942,800 mt, showing a significant gap compared to the second-ranked UAE. The US's steel tariffs on all countries, although not directly targeting India, are expected to have a ripple effect on the global steel market, undoubtedly putting immense pressure on India's steel exports. At this moment, India's announcement of tariffs on Chinese steel seems to carry an obvious implication.Imports: China's Steel Exports to India Hit a Record High but Account for Less Than 3% Overall

According to data from China's General Administration of Customs, China exported a total of 110.716 million mt of steel from January to December 2024, up 22.7% YoY. Among this, exports to India totaled 2.987 million mt, accounting for 2.69% of China's total steel exports, ranking among the top ten destinations. Meanwhile, 2024 also marked a record high for India's steel imports from China. According to data from the Indian government, in the fiscal year ending March 2024, India became a net importer of finished steel. From April to August 2024, India imported 1.1 million mt of finished steel from China, up 31.7% YoY.

Figure 1 - Total Steel Exports from China to India and YoY Growth, 2019-2024Figure 2 - Country-wise Breakdown of China's Steel Exports, 2024

• Data Source: SMM, National Bureau of Statistics

India's steel imports mainly come from South Korea, China, Japan, and the US, accounting for 12.45%, 9.00%, 8.68%, and 5.30% of its total imports in 2023, respectively. From January to November 2024, these figures were 14.57%, 13.03%, 9.42%, and 6.54%, respectively, with imports from China and Japan increasing by 44.85% and 69.31% YoY, respectively. The main products exported to India by these countries include stainless steel, hot-rolled coils, galvanized steel coils, and steel plates.

Table 3 - Major Sources of India's Steel Imports, January-November 2024    

Table 4 - Major Sources of India's Steel Imports, 2023

In summary, according to data from China's General Administration of Customs, China's steel exports to India accounted for 2.69% of its total steel exports in 2024. If India imposes tariffs, it will somewhat suppress China's steel exports to India, but the overall impact will be limited. As South Korea and Japan have signed free trade agreements with India, allowing them tariff-free access to the Indian market, they may increase their steel exports to India in light of India's tariff hike on Chinese steel and the US's tariffs on all countries.

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