Chennai: The capacity utilisation of the domestic steel industry is set to drop to 78 per cent for the first time in four years. In order to check unprecedented imports, the government is considering imposing a 25 per cent duty on steel imports.Cheaper imports from China and countries under Free Trade Agreement along with ongoing capacity addition can lead to capacity utilisation of domestic steel mills dropping from 85 per cent in FY2024 to an estimated 78 per cent in the current fiscal, the lowest we have seen in the last four years.The domestic steel industry witnessed an all-time high capacity addition of 18.2 million tonnes per annum last fiscal, and in the current year, another 15.3 mtpa of new capacity is lined up for commissioning. Further, in the next seven years, domestic mills are targeting to increase the domestic installed capacity by 50 per cent with addition of 90-95 mtpa. This would entail a large investment pipeline of $45-50 billion.However, currently steel mills are struggling to protect their market share from cheaper imports as they are expected to see a slower growth of 5 per cent in domestic finished steel production in the current fiscal.India’s finished steel imports during April-October surged to a seven-year high at 5.7 million metric tons. While China accounted for 30 per cent of the steel imports to India in 7M FY2025, 59 per cent of imports were from FTA countries like Japan, South Korea and Vietnam.Meanwhile, the government is considering a proposal to impose safeguard duty on steel imports.On December 2, the steel ministry in a meeting with the commerce department had proposed for a 25 per cent safeguard duty on certain steel products imported into the country, PTI reported.A final call on imposing the duty can be taken by the finance ministry on recommendations of the ministry of commerce.
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