India's stainless steel capacity utilisation remains below potential despite strong infrastructure-led demand, because subsidised and low-grade imports continue to undercut domestic producers, according to the Indian Stainless Steel Development Association (ISSDA).
The health of India's stainless steel value chain must be assessed on structural fundamentals rather than production volumes alone, ISSDA president Rajamani Krishnamurti told Argus.
Infrastructure-led demand in India is rising strongly, yet domestic capacity utilisation remains below potential. This reflects distorted market conditions in which subsidised and low-grade imports consistently undercut higher-quality domestic output, Krishnamurti said. Even facilities capable of producing global-standard material are operating below optimal levels despite healthy underlying demand.
Dependence on imported raw materials remains another structural challenge, he said. India continues to rely on imported inputs even though stainless steel is fully recyclable and retains intrinsic value through scrap recovery. Strengthening the domestic scrap ecosystem would not only reduce import reliance but also support circularity, resource efficiency and decarbonisation goals.
The lowest-cost (L1) tendering model prioritises immediate savings over durability and lifecycle performance. Shifting to life-cycle cost analysis (LCCA) in public procurement would reward higher-quality materials, improve infrastructure longevity and provide clearer demand signals for domestic producers, Krishnamurti said.
Policy interventions have begun addressing some of these distortions. Recent measures, particularly quality control orders (QCOs), have strengthened market standards by ensuring that material entering the country meets minimum safety and performance thresholds. These rules have helped curb inflows of substandard and non-prime steel, which often lacks adequate corrosion resistance for India's varied climatic conditions.
Anti-dumping and safeguard duties have provided some relief, but pricing dynamics remain distorted because of enforcement gaps and continued circumvention. This forces technologically advanced domestic producers to compete primarily on price rather than performance, undermining long-term infrastructure outcomes. As long as tenders are awarded solely to the lowest bidder, lower-grade imports are likely to continue capturing market share regardless of lifecycle performance, he said.
Supply security and export pressures
Securing ferro-chrome supply is another priority for the sector, Krishnamurti said. Global volatility in energy and logistics has exposed the risks of external dependence for this key alloying element. Krishnamurti proposed a three-pillar strategy: prioritising domestic value addition through local conversion of chromite reserves, integrating renewable captive power to stabilise production costs, and building strategic reserves supported by stronger internal logistics to safeguard infrastructure projects against global supply disruptions.
External trade barriers are also reshaping export prospects, he said. The EU's decision to reduce duty-free quotas by nearly 47pc and impose tariffs of about 50pc beyond those limits has made the region commercially unviable for large parts of the year. The bloc's Carbon Border Adjustment Mechanism (CBAM) further raises the landed cost of Indian stainless steel, even for efficient producers.
These developments increase pressure on India to accelerate the shift toward lower-carbon production, Krishnamurti said. At the same time, India's expanding domestic infrastructure pipeline could absorb some export volumes, while emerging markets in the Middle East, southeast Asia and Africa offer growth opportunities with fewer trade barriers.
The sector needs greater adoption of scrap-based and renewable-powered production, a dedicated national stainless steel policy and wider use of LCCA in procurement frameworks to support demand for higher-quality material, Krishnamurti said.
