India’s steel trade returned to deficit as imports rose 36.6%

India returned to a finished-steel trade deficit in April–July 2026 despite regaining net-exporter status in FY26. Finished-steel imports rose 36.6% year on year to 2.77 million tonnes, exceeding exports of 2.29 million tonnes by 0.48 million tonnes, while China supplied 32.0% of imports.

Why did India’s steel trade return to deficit in April–July 2026?

India’s steel trade returned to deficit because import growth outpaced exports during April–July 2026. Finished-steel imports reached 2.77 million tonnes in the four-month period, compared with exports of 2.29 million tonnes. The resulting 0.48 million-tonne deficit marked a reversal from FY26, when India had regained its net-exporter position in finished steel.

The FY26 improvement arose from movement in both directions: finished-steel exports increased 35.9% year on year while imports declined 31.7%. India had been a net importer in both FY24 and FY25, so FY26 represented a shift in the annual trade balance rather than a long-established surplus. The April–July 2026 result shows that lower imports and stronger exports must continue together for India to retain net-exporter status.

The comparison also distinguishes an annual outcome from a partial-year outcome. FY26 describes a full fiscal year in which export growth and lower imports restored a surplus, whereas April–July 2026 measures only the first four months of the current fiscal year. A sustained return to net-exporter status would require later-month trade flows to reverse or offset the 0.48 million-tonne deficit recorded in April–July 2026.

How concentrated were India’s finished-steel imports?

India’s import pressure was materially concentrated in Asian supply, with China accounting for 32.0% of finished-steel imports in April–July 2026. Korea and Japan followed China as the next-largest sources, although the available data does not state their individual shares. China alone therefore supplied nearly one-third of India’s 2.77 million tonnes of finished-steel imports during the period.

This source concentration matters because the reported rise in imports occurred despite protection measures aimed at select flat-steel products. The source identifies global excess capacity and competitively priced imports from major Asian producers as continuing pressures on domestic producers. India’s April–July 2026 deficit reflects both the scale of imported material and the ability of overseas suppliers to compete in the domestic market.

Global tariff changes could alter this competitive pattern further. The source states that tariff-policy changes in major markets, particularly the United States, may redirect surplus steel towards other markets including India, even though India’s direct exposure to the United States steel market is relatively limited. This mechanism would depend on whether steel displaced from other destinations is offered into India at prices competitive with domestic supply.

What protection does India’s safeguard duty provide?

India’s safeguard duty provides time-bound tariff protection for select non-alloy and alloy steel flat products, rather than protection across every steel category. A provisional 12% safeguard duty was imposed in April 2025 for 200 days to address an import surge. That provisional measure was subsequently replaced by a three-year safeguard duty with a phased rate structure.

The three-year duty was 12% in its first year, is 11.5% from April 2026 to April 2027, and is scheduled to decline to 11% in the third year. A safeguard duty is a trade measure that raises the cost of specified imports to address a surge in imports. Its practical effect on India’s trade balance depends on whether the tariff changes import volumes in covered flat products and whether exporters can remain competitive after paying the duty.

The safeguard creates a direct trade-off for domestic users of steel. The source says it is expected to limit import competition and support domestic steel prices and margins, but higher domestic prices can raise input costs for automobiles, engineering and construction, particularly where users depend on flat steel. The eventual effect therefore depends not only on reduced imports but also on whether steel-consuming industries maintain their cost competitiveness.

Which non-tariff measures are monitoring steel imports?

India had strengthened quality-control and import-monitoring measures alongside the safeguard duty, with 143 Quality Control Orders covering 723 products as of December 2025. Quality Control Orders are product requirements intended to ensure that covered goods meet specified quality standards. Their breadth, measured by 723 products, extends the policy response beyond the subset of flat steel covered by the safeguard duty.

India also introduced SARAL-SIMS in November 2025 to simplify registration under the Steel Import Monitoring System and strengthen oversight of steel imports. The Steel Import Monitoring System is an import-registration mechanism, and SARAL-SIMS is the system introduced for that registration process. These measures can improve visibility over imports, but their impact on competitive pressure depends on enforcement, product coverage and the pricing of overseas steel.

Domestic demand provides a countervailing factor to import pressure. India’s steel consumption grew 7.9% in FY26, and India was the world’s second-largest steel consumer in 2025, using 159.8 million tonnes and accounting for a 9.3% global share. Construction, real estate and automobiles were identified as contributors to demand, meaning a growing market can support domestic producers while also creating demand that imports may seek to serve.

Conclusion

India’s FY26 return to net-exporter status was real but proved vulnerable in the opening four months of the following fiscal year. Exports rose 35.9% and imports fell 31.7% in FY26, yet imports then climbed 36.6% year on year to 2.77 million tonnes in April–July 2026, overtaking 2.29 million tonnes of exports. China’s 32.0% share of imports underlines the relevance of Asian supply to that reversal.

The next measure to watch is the performance of the 11.5% safeguard duty in force from April 2026 to April 2027, together with the 143 Quality Control Orders and the SARAL-SIMS monitoring system introduced in November 2025. The unresolved issue is whether these measures curb imports of covered products without raising input costs enough to impair steel-consuming sectors such as automobiles, engineering and construction.