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[Ferro-Alloys.com] Tata Steel defends safeguard duties, says needed for cash flows and capex

Tata group flagship Tata Steel's management said in an interaction with Moneycontrol that the three-stage, three-year safeguard duties imposed by the Union government on some grades of flat steel are essential for the industry to continue investing in large capital projects. They further added that the duties are also an essential protection against cheaper imports from various countries that continue to face supply far outstripping demand.

In 2025, the company's managing director and CEO T.V. Narendran lamented that with low steel prices and margins, and without adequate support from safeguard duties, the industry may not have the rationale to make large-scale investments into steel projects, amid government concerns over flailing private sector capital expenditure. Now, with the safeguard duty and price support, the company can have the cash flows to make large investments happen, he said.

"...Steel sector was a great example of private sector capex happening in the country...The safeguard duty came in. And the rate was maybe less than what we had asked for, but it was still good enough. That allows us the comfort...You need good demand and you need reasonable profits. If the demand is good but the prices are not good, then how do you have the cash flows required to make the investments that we need to make because the steel plant cost tens of thousands of crores to build. I think we are at a much better place now," said Narendran, during the interaction.

Narendran said he expects steel prices to grow across geographies due to the safeguard duty action.

He said that with the company's new India-first strategy, where it is seeking additional local supply in pellets and iron ore, its new capacity expansion drives will also be calibrated, with more investments in downstream, value-added products as well.

After an initial, 200-day period of safeguard duties from April to October 2025, the government, after persistent demands from the steel industry, put in place a safeguard duty, starting April 2025, that will last for three years. The duties started at 12 percent, and will be reduced to 11.5 percent and eventually 11 percent in the final two years of the safeguard duty period.

Tata Steel's executive director and chief financial officer Koushik Chatterjee also noted that the high-income Organisation of Economic Co-operation and Development (OECD) countries, as well as China, continue to face structural overcapacity, and continue to look at high-growth markets like India.

"In most of the OECD countries, the steel capacity is in excess of their domestic requirement. In order to keep those plants running and employment going, they keep producing the steel. Their consumption levels are lower, so they go to the country which is growing the fastest, with 8 percent growth, which is equivalent to somewhere around 12 million tons of steel every year. In fact, OECD has a committee on overcapacity in steel, which says that everything other than innovation should shut down...That's not how the economics works and the political economy will also work. So I think that's also a consideration to keep in mind," Chatterjee observed.

• [Editor:tianyawei]