Draft National Steel Policy 2047: From Protection to Global Competitiveness

  • November 02, 2026
  • Current Affairs

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Draft National Steel Policy 2047: From Protection to Global Competitiveness

Source: The Hindu

Syllabus: GS III: Industrial policy, mining, infrastructure, trade

Why in news?

The Ministry of Steel has released the Draft National Steel Policy: Vision 2047, aiming to make India a globally competitive steel producer and raise steel exports to 45 Mt. An accompanying editorial asks a basic question: is Indian steel competitive because of efficiency and productivity, or because of heavy government protection?

Background: growth and profitability

  • India is the world's 2nd-largest steel producer at about 170 Mt. Its global share has risen from under 5% in 2000, but China still produces 961 Mt.
  • The industry's average EBITDA-to-sales ratio was about 15% over 2000-25, 3-4 percentage points above the rest of manufacturing.
  • India's three largest firms also earned 3-4 points more than major global peers over 2015-24.
  • The editorial's caution is that high profitability may reflect policy advantages rather than superior efficiency.
  • The National Steel Policy 2017 targeted 300 Mt capacity by 2030-31, and India's per capita steel consumption is still well below the world average.

How the industry is protected?

1. Cheap domestic iron ore

  • A 30% export duty on ore above 58% Fe keeps domestic prices 30-40% below global prices.
  • This transfers value from mineral-rich regions and miners to steelmakers.
  • Low prices weaken incentives for exploration and mining, causing economic losses in mining regions.

2. Import tariffs and non-tariff barriers

  • The 7.5% import tariff plus an 11.5% safeguard duty gives an effective duty of about 18%, against 3-4% in ASEAN.
  • Quality Control Orders (QCOs) cover 228 steel products and restrict imports and competition.
  • The Gauba Committee reportedly recommended removing 122 products from the QCO list, but only 59 have been suspended.

3. Costs passed to downstream industries

  • Indian hot-rolled coil sells at a 6-7% premium over Japan, a high-cost producer.
  • Steel is about 15% of construction project costs and about 5% of automobile raw material costs.
  • Higher input costs hurt MSMEs, especially exporters. Protection for steel thus taxes the wider manufacturing ecosystem.

 

 

What if protection were removed?

Scenario

Impact on profitability

Alt 1: Tariff cuts lower steel prices by 6%

Largest private firm -25%; largest PSU -50%; fastest-growing private firm -40%

Alt 2: Iron ore bought at global prices

Largest private firm's margin falls to about 7%; fastest-growing private firm -95%; largest PSU turns negative

The industry's profits depend heavily on policy support. Real competitiveness requires survival through productivity, innovation and cost efficiency.

Reforms suggested

  1. Calibrated liberalisation: Cut import duties to ASEAN levels over five years and remove unnecessary QCOs, especially those the Gauba Committee identified.
  2. Lessons from other sectors:
    • Pharma and auto-component tariffs fell from about 40% (2000) to 10-15% (2023).
    • Auto-component export share rose from 0.2% (2003) to 1.5% (2024), and pharma's from 0.7% to 2%.
  3. Strategic privatisation:
    • Private firms out-earn PSUs, which suggests efficiency and governance problems in the latter.
    • SAIL's share fell from 30% to 10%, while JSW rose from 1% to 12% and Tata held at 11-13%.
    • Privatising selected SAIL plants, with strategic oversight retained, could improve efficiency and fiscal outcomes.

Critical analysis

  • In favour of reform: Infant-industry protection is meant to be temporary. A 6-7% premium on a basic input raises costs across manufacturing and construction, and export competitiveness comes from cheap inputs.
  • Concerns: Global overcapacity and dumping (especially from China) can hurt domestic producers. Steel is also a strategic sector, and abrupt liberalisation could affect jobs, PSUs and mining-region revenues. A phased, calibrated approach is therefore needed.

Conclusion

India's steel industry has grown remarkably since Jamsetji Tata laid the foundations of modern steel in 1912. The Vision 2047 policy should build on that legacy through efficiency, technology, competitive input markets and export orientation. A phased shift from protection-led profitability to productivity-led competitiveness is essential for the 45 Mt export goal.

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