India’s newly imposed three-year safeguard duty on most flat steel imports is already reshaping the country’s steel market, according to ICICI Securities, which has upgraded its earnings outlook for the sector. The brokerage raised EBITDA estimates for Financial Year 2027 and 2028 by 3-10%, attributing the revision to stronger domestic pricing power and reduced low-cost imports.
India steel safeguard duty
The duty, set at 12% in year one and tapering marginally over the following two years, covers almost 70% of flat steel imports. The move follows an investigation by the Director General (Trade Remedies), which found a recent, sharp and significant rise in imports that had caused or threatened serious injury to domestic producers. Market reaction has been swift: domestic hot-rolled coil prices have risen about 6% since early December, and ICICI Securities expects an additional 4-5% upside in the near term.
ICICI Securities said the protection will likely sustain a minimum 10% premium of domestic prices over global rates for the next two-and-a-half years. That margin support has already begun to show in EBITDA per tonne for spot steel, which has improved by roughly Rs 2,500-3,000. Analysts at the brokerage anticipate sharper margin expansion from the fourth quarter of FY26 onwards after a weak third quarter.
The change in trade policy has differing implications across listed steelmakers. JSW Steel and Tata Steel are seen as the principal beneficiaries because of their higher exposure to flat products. Jindal Steel is also well placed, partly due to a recent expansion into flat steel production. State-owned SAIL will gain from margin expansion but, given its lower proportion of flat products, is expected to be a relatively smaller beneficiary.
ICICI Securities has reflected the improved prospects in higher target prices for several stocks, reiterating a preference for Tata Steel and Jindal Steel on the basis of earnings upside relative to valuations. The report also flagged downstream firms such as APL Apollo, which could enjoy inventory-led margin improvements and restocking gains as prices firm across the value chain.
Trade-policy measures of this kind can have broader economic consequences. By limiting the flood of low-cost imports, the safeguard duty is designed to protect domestic capacity and employment in the steel sector. For manufacturers that rely on flat steel inputs, the duty may raise input costs in the short term, but the protection gives domestic producers room to stabilise margins and reinvest in capacity.
Investors will be watching quarterly results for confirmation that margins and earnings are tracking the upgrade in estimates. ICICI Securities expects the benefits to become more visible from Q4FY26, which should guide expectations for FY27 and FY28 performance. The brokerage’s outlook suggests a positive earnings cycle for Indian steelmakers, driven by a sustained premium to global steel prices and reduced import pressure.
In sum, the safeguard duty marks a significant policy response to import pressure and, according to market analysts, has begun to deliver firmer domestic prices and improved profitability for steelmakers. The next few quarters will be crucial in confirming how much of the projected EBITDA improvement translates into delivered earnings.
Key Takeaways:
- ICICI Securities raises FY27 and FY28 EBITDA estimates for Indian steelmakers by 3-10% after the India steel safeguard duty.
- Domestic hot-rolled coil prices have climbed 6% since early December, with a further 4-5% upside expected.
- Nearly 70% of flat steel imports now covered, likely keeping domestic prices at a minimum 10% premium to global levels for the next two-and-a-half years.
- Tata Steel, JSW Steel and Jindal Steel are viewed as the main beneficiaries, while downstream firms such as APL Apollo could gain indirectly.
