Draft National Steel Policy: Vision 2047 – Shifting from Protection to Global Competitiveness

UPSC Relevance: 

GS Paper III: Indian Economy and issues relating to planning, mobilization of resources, growth, development, and industrial policy. 

Why in News: 

The Ministry of Steel released the Draft National Steel Policy: Vision 2047, targeting global competitiveness and increasing steel exports to 45 million tonnes (Mt).  Background

 • Growth Trajectory: India share in global steel production expanded from under 5% in 2000 (9th globally) to become the 2nd largest producer at 170 Mt, though still trailing China (961 Mt).  

• High Domestic Profitability: Average EBITDA/Revenue of top Indian steel firms stood around 15% (2000–25), 3–4% higher than global peers, largely driven by protectionist measures. 

• Protectionist Regime: Domestic steel is shielded by a 7.5% import duty, an 11.5% safeguard duty (totaling ~18% duty rate vs. 3–4% in ASEAN), a 30% export duty on iron ore (>58% Fe content), and non-tariff barriers via Quality Control Orders (QCOs) on 228 steel products.

Impact & Measures 

• Major Implications & Challenges:

 o Protectionism inflates domestic steel prices (hot-rolled coils sell at a 6–7% premium), burdening downstream sectors like construction (steel = ~15% of cost), automotive (steel = ~5% of raw materials), and MSME capital goods.  o High iron ore export duties underpay domestic mineral wealth and disincentivize mining exploration, leaving only 10% of India\'s geological potential explored.  

o Public sector inefficiency remains noticeable; SAIL’s market share dropped from 30% to 10% (2000–2025), whereas JSW’s rose from 1% to 12%.

  • Government Initiatives & Proposed Solutions: o Tariff & Non-Tariff Rationalisation: Gradually reduce steel import tariffs over 5 years to ASEAN levels (~3–4%) and implement the Gauba Committee recommendations to dismantle unnecessary QCOs.  

o Mining Reforms: Abolish the 30% iron ore export duty to align domestic prices with global benchmarks and reform mineral allocation policies to incentivize private exploration.  

o PSU Disinvestment: Consider strategic privatisation of select public sector plants to boost operational efficiency.

  Essential Definitions 

• Quality Control Orders (QCOs): Mandatory regulatory standards issued by the government to restrict imports of non-compliant foreign products.  

• Safeguard Duty: An emergency tariff applied on imports to protect domestic industries from sudden surges of cheap foreign products. 

 Legal and Constitutional Framework

 • Mines and Minerals (Development and Regulation) Act, 1957 (Amended 2023): Regulates the mining sector, mineral concessions, and exploration reforms.

• Customs Act, 1962: Provides the framework for imposing import tariffs, safeguard duties, and export duties on minerals and steel products.  

Conclusion

 To achieve Vision 2047, India steel sector must transition from tariff-backed protectionism to genuine cost efficiency and global competitiveness. Phasing out market distortions will empower downstream manufacturing, boost mineral exploration, and build a self-sustaining industrial economy.