MSME Concerns:

Micro, Small, and Medium Enterprises (MSMEs) are voicing concerns over a proposed hike in steel import duties.
They argue that the increase could significantly impact their cost structure and operational efficiency.
Impact on Costs:

A rise in import duties could lead to higher steel prices, affecting the cost of production for various industries.
MSMEs, which are already price-sensitive, may struggle with increased input costs.
Competitive Disadvantage:

MSMEs worry that higher duties could put them at a competitive disadvantage compared to larger firms and international competitors.
Increased costs may also affect their pricing strategies and market share.
Sectoral Impact:

Steel-intensive sectors, including construction and manufacturing, could see an escalation in project costs.
MSMEs involved in these sectors may face financial strain, potentially leading to reduced production or layoffs.
Government Response:

The government is considering the feedback from MSMEs and industry stakeholders.
A review of the proposed duty hike will assess its impact on various sectors and the overall economy.
Recommendations:

MSMEs are recommending that the government reconsider or modify the proposed duty increase to mitigate adverse effects.
They are also advocating for supportive measures to help them adapt to changing market conditions.
Conclusion:
The proposed increase in steel import duties has raised significant concerns among MSMEs, who fear it could lead to higher production costs and competitive challenges. As the government reviews the proposal, there is a call for balanced measures that consider the needs of small and medium enterprises.

Tata Steel announced that Odisha is set to become the company’s largest investment destination following the phase-II expansion of its Kalinganagar plant. This expansion will increase the plant’s capacity from 3 million tonnes per annum to 8 million tonnes per annum. The company has invested Rs 270 billion in this phase of the expansion and is nearing the commissioning of the new capacity at the unit, according to a press release.

The ongoing expansion at Kalinganagar is expected to significantly contribute to Tata Steel’s goal of reaching a 40 million tonnes per annum capacity in India by 2030. The company indicated that the phase-II expansion of its Kalinganagar plant in Jajpur district will also elevate Odisha to a prominent position as the largest investment destination for Tata Steel, which is the country’s oldest steel maker.

Together with the Tata Steel Meramandali plant (formerly Bhushan Steel) in Dhenkanal district, the company’s total investment in Odisha exceeds Rs 1 trillion. As Tata Steel approaches the commissioning of its expanded Kalinganagar plant, which will have a capacity of 8 million tonnes per annum, the company also sees potential to further increase this capacity to 16 million tonnes per annum in the future. This will further enhance Odisha’s role in Tata Steel’s growth journey, the release noted.

It is anticipated that the government will require automakers to recycle a certain percentage of steel from old vehicles. This measure is expected to enhance the steel circular economy and increase the availability of scrap steel. Based on the draft regulations concerning Extended Producer Responsibility (EPR) for end-of-life vehicles released on January 30, it is predicted that the Environment Ministry will introduce regulations mandating automakers to recycle or recover at least 8% of the steel used in vehicles from the fiscal year 2026, which was originally set at 10% in the draft. The requirement is expected to gradually rise to 18% by 2035-36, although the final mandate may be capped at 18% instead of the 30% proposed.

According to CRISIL, if automakers enhance their recycling efforts, an additional 0.2-0.25 million tonnes of steel scrap could become available. While this increase is modest compared to the total steel scrap consumption, it would still benefit the steel ecosystem and support the steel circular economy. Steel companies see the improved availability of scrap as beneficial as the sector works to reduce its carbon footprint. India, which imported 11.2 million tonnes of steel scrap in fiscal year 2024, lacks sufficient domestic scrap supply.

Tata Steel’s CEO and Managing Director, T. V. Narendran, noted that the mandate would help formalise the steel scrap market and positively impact efforts to lower carbon emissions, supporting sustainability. In steelmaking, scrap is used in electric arc and induction furnaces, while increasing scrap rates in carbon-intensive blast furnace processes could reduce emissions. As steel companies aim to decarbonise, scrap-based technologies are expected to play a key role.

AM/NS India’s Ranjan Dhar mentioned that even a slight improvement in scrap availability would be welcomed, especially given the anticipated global restrictions on seaborne trade as the industry shifts towards low-carbon steel production. Jayant Acharya of JSW Steel added that due to various countries’ protectionist measures, domestic scrap supply chains must be established swiftly to support India’s decarbonisation goals.

Dhar also highlighted that in India, vehicles have a longer life cycle compared to other countries, which means that to facilitate recycling, compelling incentives must be introduced to encourage the return of end-of-life vehicles. Additionally, steel companies are rapidly expanding capacity, with CRISIL MI&A estimating that large players will add around 50 million tonnes per annum by 2028, predominantly through blast furnace-based methods.