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In the face of global tariff tremors caused by former U.S. President Donald Trump’s latest move—a sweeping 25% tariff on Indian exports- India’s steel giant, Tata Steel, has made it clear: its Indian operations are largely insulated. However, the ripple effect of this policy could still touch the pulse of India’s MSME sector, which is closely woven into the nation’s steel ecosystem.
In an exclusive interaction with Moneycontrol, Tata Steel CEO T.V. Narendran and CFO Koushik Chatterjee shared a detailed assessment of the company’s exposure to the U.S. tariff policy and its wider implications.
Tata Steel: Immune in India, Cautious in Europe
According to Narendran, Tata Steel does not export steel directly from India to the U.S. As a result, the direct impact on its Indian operations is negligible. Even for Indian MSMEs that manufacture and export steel-based products to the U.S., the downstream impact on Tata Steel’s domestic sales is expected to be limited.
However, the same cannot be said for Tata Steel’s European businesses. In the UK and Netherlands, around 3–4% and 10% of
In the face of global tariff tremors caused by former U.S. President Donald Trump’s latest move—a sweeping 25% tariff on Indian exports- India’s steel giant, Tata Steel, has made it clear: its Indian operations are largely insulated. However, the ripple effect of this policy could still touch the pulse of India’s MSME sector, which is closely woven into the nation’s steel ecosystem.
In an exclusive interaction with Moneycontrol, Tata Steel CEO T.V. Narendran and CFO Koushik Chatterjee shared a detailed assessment of the company’s exposure to the U.S. tariff policy and its wider implications.
Tata Steel: Immune in India, Cautious in Europe
According to Narendran, Tata Steel does not export steel directly from India to the U.S. As a result, the direct impact on its Indian operations is negligible. Even for Indian MSMEs that manufacture and export steel-based products to the U.S., the downstream impact on Tata Steel’s domestic sales is expected to be limited.
However, the same cannot be said for Tata Steel’s European businesses. In the UK and Netherlands, around 3–4% and 10% of steel output, respectively, are exported to the U.S., largely comprising high-end steel not easily replaced by American alternatives. Here, the company faces tariffs ranging from 10% (UK) to a steep 50% (EU), making strategic routing of exports and exemption applications essential.
The UK’s “melt-and-pour” condition poses another challenge. Under this rule, only steel fully produced in UK facilities can benefit from lower tariffs. With Tata’s Port Talbot blast furnaces shut for a £1.25 billion green transformation project, the company is currently not producing crude steel in the UK—a technicality that risks excluding it from reduced-duty channels unless exemptions are granted.
MSMEs: Indirect Exposure, Growing Concerns
While Tata Steel may be shielded from direct shocks, MSMEs dependent on steel as a raw material or intermediary product may not be as fortunate. From auto components to construction equipment, engineering goods, and fabricated metal products, MSMEs in several export-oriented sectors rely on Tata Steel and similar large manufacturers to meet their input needs.
These MSMEs, many of whom export value-added products to the U.S., could face shrinking margins and order deferrals as American buyers reassess costs under the new tariff regime. Even a 1–3% increase in input costs, driven by steel price fluctuations or disrupted demand cycles, could significantly hurt smaller firms operating on tight margins.
According to industry observers, the concern is not immediate disruption but long-term competitiveness. If customers abroad start shifting to suppliers in countries unaffected by tariffs, India’s small exporters could lose hard-earned ground.
Macro Signals Show Resilience and Caution
Despite the volatility, Tata Steel’s recent performance tells a story of domestic resilience. The company posted Rs 2,078 crore in net profit in Q1 FY26, more than doubling year-on-year, even as revenue dipped by 3%. This was supported by a 12% safeguard duty on certain steel imports, aiding domestic price stability.
Narendran notes a visible rebound in rural demand, with motorcycle and tractor sales—proxy indicators of rural income—showing encouraging trends. However, liquidity constraints in government spending and payment cycles, especially in infrastructure and construction, have kept MSMEs under pressure.
The steel sector itself is among India’s top private capex contributors, with annual investments exceeding Rs 50,000–60,000 crore across Tata Steel, JSW, Jindal Steel & Power, and ArcelorMittal. Yet, unless capacity utilisation improves and profitability remains steady, broader private capex—especially from MSMEs—may stay muted.
Debt, Cash Flows, and the Future of Indian Steel
CFO Koushik Chatterjee acknowledged that Tata Steel's net debt peaked at Rs 90,000 crore, largely due to heavy capex in Kalinganagar Phase II (Rs 27,000 crore) and strategic buys like NINL (Rs 12,500 crore). However, disciplined deleveraging has brought this down to Rs 82,000 crore, with expectations of further reduction once ongoing projects conclude.
For MSMEs, this signifies two things: the stability of upstream suppliers like Tata Steel is holding steady, and input availability is unlikely to be a constraint in the near term. However, global market volatility, especially in the U.S. and Europe, could alter cost structures quickly, demanding agile planning and government-backed safeguards for small exporters.
What Lies Ahead: Policy Support & Strategic Agility
While Tata Steel’s confidence offers relief, MSMEs need proactive support to tide them over the uncertainty. Measures such as branding incentives, interest subvention, trade finance facilitation, and fast-tracked RoDTEP claims can help cushion short-term shocks and restore long-term confidence.
The government must also push for sector-specific tariff exemptions, particularly for MSME-heavy clusters dealing with fabricated metal goods, speciality wires, and small machinery. As India balances its global trade diplomacy, ensuring that its smallest exporters remain protected should be a top priority.
In a world where tariffs and geopolitical shifts are becoming unpredictable constants, India’s MSMEs must prepare not just to survive, but to adapt and thrive. And that journey begins with policy foresight, strategic partnerships, and a steel-strong will to endure.