Why India's iron ore imports are at a seven-year high despite ample reserves

India imported 12.2 million tonnes of iron ore in calendar year 2025, nearly double the previous year, according to commodities market intelligence firm BigMint. Brazil and Oman emerged as the largest suppliers, with JSW Steel alone accounting for nearly 80% of total imports.

Import economics

The surge has been led largely by company-specific supply constraints as well as broader pricing dynamics.

“This was primarily on account of a surge in imports largely led by JSW Steel as it emerged as the largest importer as it surrendered its Jajang mines in the Odisha iron ore mine in 2025, which led to a drop in its domestic production. To make up for this shortfall, the company turned to imports," said Dhruv Goel, CEO of BigMint.

Lower global prices also made overseas purchases economically attractive. Iron ore prices were below $100 per tonne at the start of 2025, creating an arbitrage opportunity and making imports viable, Goel said.

After accounting for logistics, domestic iron ore prices are broadly comparable to imports, or marginally cheaper, he said. However, imports offer steelmakers the advantage of sourcing large volumes from a single mine with uniform quality. In India, NMDC operates under a long-term supply agreement, while other miners lack the capacity to supply bulk cargoes.

“In addition to this, high transport costs made it hard to move pellets from central to western India, forcing west coast steel mills to import iron ore from the Middle East," Goel added.

Queries sent to JSW Steel, Tata Steel, Jindal Steel, Steel Authority of India, and AMNS India were not answered till press time.

Quality crunch

Experts say these near-term factors are being compounded by a structural deterioration in the quality of domestic ore and rising global availability of high-grade supply.

“India has seen rapid deterioration in the quality of ore. This has been coupled (with) large high-grade mines from outside India coming into production in 2025, like Simandou mega-mines in Guinea, about three new mine-expansions in Australia and Vale’s Northern Mines. This keeps availability and price of high-grade ore from India tight and keeps the price of international iron ore soft," said Niladri N Bhattacharjee, Partner and Metals and Mining Industry Leader at Grant Thornton Bharat.

This has created a mismatch between volume and usability. Steel production capacity expanded 9.5% to 163 million tonnes in calendar year 2025, while domestic iron ore output rose 4% to 295 million tonnes, according to BigMint, even as availability of high-grade, steel-making ore has tightened.

Global prices have also declined sharply since 2023, more than 20%, as per Bhattacharjee, further tilting the economics in favour of imports.

Given that imported iron ore is of better grade both in terms of iron content as well as gangue material, the actual value-in-use of imported ore makes it as good as Indian ore economically at these levels, especially for coastal plants, said Bhattacharjee.

Since 2015, around 135 iron ore mines have been auctioned, but only about 35 are operational. Odisha, Chhattisgarh, Karnataka, Jharkhand, and Maharashtra are the top five iron ore-producing states.

“It is concerning that the domestic raw material of iron ore production is lagging while steel production continues to increase. At this rate, there is a risk of raw material shortages, which could impact the targets set under the National Steel Policy. Although the government has introduced several measures and policy amendments over time, they may still not be sufficient to meet the growing demand in the future," said Goel.

“Ideally, iron ore is available in India, the country should be self-sufficient rather than relying on imports," he said, adding that there is need for policy intervention because high premium bids have made auction have made it economically non-viable.

Not all analysts, however, see the import surge as a sign of structural scarcity.

“There is no fundamental shortage of iron ore in India, the recent rise in imports is largely driven by pricing dynamics, not a lack of resources. This is purely a pricing issue. If a company gets cheaper iron ore from overseas, it will import it," said Suman Kumar, assistant vice-president for metals and mining at brokerage Philip Capital.

In 2025, the government held a series of meetings to boost iron ore supply and rein in prices, discussing measures such as reallocating non-operational iron ore mines held by Steel Authority of India Ltd (Sail) and Odisha Mining Corporation Ltd (OMC), capping auction premiums at 50%, linking bids to upfront payments and levying export tax on low-grade iron ore, Mint reported in September.

However, resistance from states and steelmakers stalled the process, and a mines ministry committee set up to shepherd the reforms has not met in more than four months, Mint reported on 18 November.

Looking ahead, experts expect imports to remain elevated in the near term, even as fresh capacity slowly comes on stream.

“Some green-field mines have been auctioned. When they come onstream, the quality of ore will again start correcting. Until then Indian ore will continue to find competition from high grade imported ore," said Bhattacharya.

Goel echoed a similar view, saying imports are likely to remain high in 2026, though they could ease from 2025 levels as global iron ore prices have moved above $100 per tonne and the rupee has weakened.

Philip Capital’s Kumar said production was temporarily disrupted by the monsoon in 2025, but that this was not a structural issue. Going forward, he said, availability is expected to improve as several mid-sized players ramp up production.