A critical policy mismatch is putting pressure on India's ambitious steel capacity expansion plans, according to a new analysis. A report by the Global Trade Research Initiative (GTRI) warns that government measures designed to protect domestic producers are inadvertently raising the cost of a vital, non-substitutable raw material, threatening the sector's competitiveness and broader economic growth.
The Core of the Contradiction: Protecting Producers vs. Raising Costs
The report highlights the tightening web of restrictions on imports of low-ash metallurgical (LAM) coke, a specialized fuel accounting for 35–40% of steel production costs. While the intent to shield domestic metcoke producers is valid, the GTRI argues that layering quotas, safeguard duties, and anti-dumping measures on this essential input constitutes an "over-correction."
"Protecting domestic metcoke producers is valid, but stacking quotas and duties on a non-substitutable input risks over-correction and macroeconomic consequences," said Ajay Srivastava, founder of GTRI. The problem is technical: most Indian coal has an ash content of 14–15%, making imports of superior, low-ash coke technically unavoidable for many manufacturers to ensure furnace efficiency and lower fuel consumption.
A Tangle of Restrictions Squeezing Supply
Over the past year, access to LAM coke has been severely constrained. The GTRI report details a sequence of controls: a 2023 safeguard investigation led to import caps, followed by country-wise quotas from January 2025 limiting imports to 1.4 million tonnes per half-year. This ceiling is set to remain until December 2025.
Simultaneously, an anti-dumping probe targeting Australia, China, Colombia, Indonesia, Japan, and Russia resulted in provisional duties of $60–$120 per tonne in November 2025. The GTRI flagged a major issue in this investigation: the use of container freight benchmarks instead of the actual dry-bulk freight costs ($20-25/tonne), which artificially inflated calculated dumping margins.
The supply impact is already stark. In the first half of 2025, steelmakers secured only about 1.5 million tonnes against a demand exceeding 3 million tonnes, forcing greater reliance on uneven domestic supply and raising the risk of production halts.
Ripple Effects: Soaring Prices and Lost Competitiveness
The direct consequence is a sharp rise in costs. With LAM coke constituting roughly 38% of finished steel costs, a 20–25% rise in coke prices pushes up final steel prices by 3–5%. This squeezes producer margins and undermines competitiveness in both domestic and export markets.
Beyond cost, restricted access to quality coke has reduced productivity. It forces higher coke consumption, increases energy use, and causes operational downtime. The pain is felt most acutely by MSMEs in secondary steel, foundries, and ferro-alloys. These cost pressures then cascade into critical downstream sectors like automobiles, infrastructure, and engineering exports.
With quantitative restrictions nearing expiry at the end of 2025, Srivastava urges immediate policy recalibration. "India should restore predictable and adequate access to LAM coke by lifting or sharply expanding quotas, avoiding overlapping controls, and recalculating duties using realistic dry-bulk freight," he stated. A calibrated approach, he argues, would lower steel costs, improve productivity, support MSMEs, and strengthen overall economic growth, reminding policymakers that "in steel—and in growth—inputs matter."
