An Exporter's Cost or a Nation's Shield: How Long Should India Protect Its Steel?

Protect Against Dumping, Not Against Competition

India wants steel to do two jobs that pull against each other. As an industry, steel must be strong enough to survive a world awash in Chinese supply. As an input, it must be cheap enough to let carmakers, builders and small exporters compete. Every rupee of protection helps the first job and taxes the second.

What the Authors Argue Montek S. Ahluwalia, Shishir Gupta and Rishita

Sachdeva ask a sharp question: are India's strong steel profits proof of efficiency or of protection? By their estimate, industry margins have run 3 to 4 percentage points above the rest of manufacturing. They point to a 7.5% import tariff, an 11.5% safeguard duty, Quality Control Orders and a 30% export duty on higher-grade iron ore that, they say, keeps domestic ore 30 to 40% below world prices.

The cost then travels downstream. They put hot-rolled coil at a 6 to 7% premium over Japan. Steel is about 15% of construction project costs on their figures and a smaller exporter has little power to absorb such a difference.

They also show that pharmaceuticals and auto parts gained export share after tariffs fell from about 40% in 2000 to 10-15% in 2023.

Why the Other Side Is Not Just Lobbying

China exported just over 119 million tonnes in 2025, a record. That is about 70% of India's entire crude output and more than two and a half times India's export target for 2047. Its domestic demand has been falling, so the steel needs somewhere to go.

Meanwhile, the US has doubled its tariff to 50%, the EU has planned tighter quotas and 62 countries had imposed 207 restrictions on Chinese steel by October 2025. If everyone else builds walls, the most open large market becomes the dumping ground.

A plant takes years to build and capacity lost to a temporary price collapse does not return quickly. India's 604 million tonne ambition also needs financing, which margins help provide.

TAN's Position

TAN's position is that India should phase down general protection on a published schedule, while keeping a strong, targeted backstop against proven dumping and import surges. The distinction matters. A flat tariff charges every buyer, all the time, whether or not anyone is dumping.

A trade remedy applies only after evidence of unfair pricing or injury. If other countries keep raising barriers and diverted steel really arrives, the remedy can bite harder without raising costs on fairly priced imports.

That answers the strongest objection without leaving exporters to pay for it permanently. The sequence should follow the evidence. In the authors' own table, a 6% price fall takes the largest private firm's margin from 21% to 16%, which it can survive.

Buying all ore at world prices takes it to 6.6% and the largest public firm to minus 3.1%. So tariffs can move first. Safety-critical standards should stay. The ore duty should go last, along with mining reform, since the shock there is larger.

The safeguard's expiry in April 2028 offers a natural first test. TAN would change its view if import surges outran the remedy process or if downstream prices failed to fall as protection eased.