India’s Steel Crisis? Import Curbs Set to Disrupt MSMEs – Survival Guide Inside!

Table of contents:

• Introduction
• Why is the Indian Government considering these restrictions?
• Potential impact on MSMEs & steel supply chain
• Market reactions & industry expert opinions
• How MSMEs can adapt & survive this disruption
• Conclusion

Update on (19 March 2025): India’s Commerce Ministry has proposed a 12% safeguard duty on non-alloy and alloy steel flat products for 200 days to protect the domestic steel industry from a surge in imports. This follows a petition by the Indian Steel Association (ISA), highlighting the threat to local manufacturers.

Update (11 March 2025): India implements a 15% safeguard duty on steel imports, primarily from China to protect the domestic steel industry, let’s  explore about it – Why India’s 15% Steel Duty? Import Statistics, Economic Impact & Analysis

More detailed on the latest updates – Steel export and import – Latest updates

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The Indian government is reportedly considering an extension of import curbs on key steelmaking raw materials, such as ferrous scrap, coke, and manganese ore. This move could increase steel prices, create supply shortages, and significantly impact MSMEs dependent on affordable raw materials.

With supply chain disruptions looming, industry players are scrambling to find alternatives. But what’s driving this decision? How will it affect the steel sector, and what can MSMEs do to survive?

Let’s break it down.

The government’s rationale behind tightening steel import rules includes:

• Reducing Dependence on Foreign Raw Materials – Aligning with AatmaNirbhar Bharat (self-reliant India).
• Protecting Domestic Producers – Encouraging local sourcing to support Indian suppliers.
• Trade Balance & Economic Policies – Reducing imports to manage fiscal pressures.
• Global Market Factors – Ongoing geopolitical tensions and supply chain disruptions forcing India to rethink its trade strategies.

Industry associations have raised concerns, urging the government to reconsider, as MSMEs may bear the brunt of rising costs.

How Will MSMEs & Steel Supply Chains Be Affected?

If import restrictions are extended or tightened, MSMEs face multiple challenges, including:

• Raw Material Shortages – Limited access to ferrous scrap and coke could disrupt production.
• Soaring Prices – Domestic suppliers may increase prices due to reduced competition.
• Production Delays – Shortages can lead to slower deliveries and lost orders.
• Export Competitiveness at Risk – Higher costs may make Indian steel less competitive globally.

If import restrictions continue, MSMEs will struggle to source affordable raw materials, and steel prices will surge

Market Reactions & Industry Expert Opinions

The steel industry is divided on the issue:

1. Large Steel Producers – Support the move, arguing it strengthens domestic manufacturing.
2. MSMEs & Steel Fabricators – Oppose it, fearing higher costs and supply chain instability.
3. Bodies & Trade Groups – Urging the government to reconsider or offer exemptions for MSMEs.

“If the government extends these curbs without support measures, MSMEs will struggle to survive in a high-cost environment.” – A Leading steel market analyst

How MSMEs Can Adapt & Survive This Disruption

Despite these challenges, MSMEs can take proactive steps to minimize risks:

1. Explore Alternative Raw Material Sources – Strengthen ties with domestic suppliers or find substitutes.
2. Optimize Inventory Management – Stockpile essential materials before prices rise further.
3. Join Industry Alliances – Engage with MSME trade groups to advocate for policy relief.
4. Invest in Cost-Efficient Technologies – Reduce dependency on expensive raw materials.
5. Monitor Policy Updates – Stay updated on government announcements and subsidies.

Conclusion

India’s steel import curbs could have far-reaching consequences for MSMEs, with potential raw material shortages and rising production costs. While the government aims to boost domestic manufacturing, the industry is urging a balanced approach to avoid disrupting small businesses.

What’s next?

If these restrictions are formalized, MSMEs must act fast to secure supplies, optimize costs, and adapt to changing market conditions.

Stay tuned as we continue to track this critical policy shift affecting India’s steel industry.

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Disclaimer: This article is based on publicly available information and expert analysis as of 25th Feb 2025. Government policies on steel import curbs may change. Readers are advised to verify details from official sources before making business decisions.

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