The devaluation has come at a time when India’s external trade has reversed and imports are at a high.

According to a JP Morgan Asia Pacific Equity Research report, in 2003-04, India’s steel imports were 1.5 million tonnes and exports 4.5 million tonnes. In 2014-15, India’s steel imports were 9.3 million tonnes and exports 5.5 million tonnes. China’s share was 3.6 million tonnes, up 232 per cent year on year. Effectively, imports are currently 15 per cent of monthly consumption, according to the report.

That scenario changed for the worse when devalued the yuan recently. It meant that China, which was anyway exporting 10 million tonnes of steel a month to countries across the world, would become more competitive. At current import duty — India raised the import duty from 7.5 per cent to 10 per cent on flat steel and to 7.5 per cent from 5 per cent for long steel in June and another 2.5 per cent after the yuan devaluation–the landed price of Chinese hot rolled coil works out to Rs 25,000 a tonne versus the domestic hot rolled coil price of Rs 28,000 a tonne.

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Steel sector: India has worries other than China