India wants to scale up steel production. Capacity expansion, export competitiveness and downstream manufacturing are all central to that ambition. But a recent GTRI report flags a policy contradiction that is making steel costlier to produce just as demand is rising.
At the heart of the issue is low ash metallurgical coke, a critical input that accounts for roughly 35–40% of steel production costs. While the government has moved aggressively to protect domestic steelmakers from cheap finished steel imports through safeguard duties, anti-dumping measures and quality control orders, it has simultaneously tightened access to this essential raw material.
The result is a squeeze on steelmakers from the input side, pushing up costs, reducing efficiency and slowing investment.
Low ash metallurgical coke is indispensable to the blast furnace–basic oxygen furnace route, which still dominates steelmaking in India. It provides heat, acts as a reducing agent and ensures furnace stability and permeability. Its low ash content improves efficiency, cuts fuel consumption and boosts productivity.
India’s dependence on imports here is not a policy choice but a technical reality. Most domestic coal has ash content of 14–15%, making it unsuitable for efficient blast furnace operations at scale. For many plants, imported low ash coke is unavoidable.
Over the past year, the government has layered multiple trade controls on metallurgical coke.
A safeguard investigation in 2023 first led to import curbs. This was followed by quantitative restrictions from January 2025, setting country-wise caps that limit imports to 1.4 million tonnes per half-year. These caps have since been extended until December.
At the same time, an anti-dumping probe covering supplies from Australia, China, Colombia, Indonesia, Japan and Russia resulted in provisional duties ranging from $60 to $120 per tonne, imposed in November 2025.
Together, these measures restrict both how much coke can enter the country and how expensive it is once it does.
The GTRI report points to a serious methodological issue in the anti-dumping investigation. Metallurgical coke is shipped almost entirely as dry bulk cargo, with freight costs typically around $20–25 per tonne.
However, the investigation reportedly relied on container freight benchmarks, which are several times higher than bulk shipping rates. This inflated the calculated landed cost and dumping margins, resulting in duties that far exceed what actual trade economics would justify.
The impact is already visible on the ground. In the first half of 2025, steelmakers were able to secure only about 1.5 million tonnes of metallurgical coke against demand of more than 3 million tonnes. Plants have been forced to rely on uneven domestic supply, increasing the risk of production cuts.
Since coke accounts for close to 38% of finished steel costs, a 20–25% increase in coke prices translates into a 3–5% rise in steel prices. That hits margins, undermines export competitiveness and raises prices in the domestic market.
There are also operational costs. Limited access to quality coke reduces furnace productivity, raises coke rates, increases energy consumption and causes downtime.
The cost shock does not stop at primary steel producers. MSMEs in secondary steel, foundries and ferro-alloys are the most exposed, with limited ability to absorb higher input costs.
These pressures then cascade into automobiles, infrastructure, engineering goods and exports. Higher steel prices act like a tax on growth, dampening investment and slowing activity across the economy.
The report does not argue against protecting domestic coke producers. It warns against over-correction. Stacking quotas and high duties on a non-substitutable input creates macroeconomic costs that outweigh the benefits.
As quantitative restrictions approach expiry at the end of 2025, the report calls for lifting or sharply expanding import quotas, treating metallurgical coke as a strategic input rather than a discretionary import. It also urges a recalibration of anti-dumping duties using realistic dry-bulk freight benchmarks and avoiding overlapping trade remedies.
More broadly, it argues for a comprehensive review of steel regulation. Protecting finished steel while restricting critical inputs works at cross-purposes. If India wants competitive steel and faster growth, input and output policies need to move in the same direction.
Source Name : Economic Times