India's steel supply deficit jumped from a meager 1 per cent in the financial year 2011-12 to 2012-13, leading to increase in import of the metal, stats released by Bank of America Merrill Lynch showed.

In 2012-13, India produced 66.4 million tones of steel as against its total demand of 69.1 million tones. In the previous year, the country produced 65.3 million tones of steel as against its total demand of 66 million tones.

The deficit forced the country to bridge the gap by importing steel from foreign countries.

As a result, the country's steel import jumped 14.2 per cent to 6.2 million tones in financial year 201-13, from 5.4 million tones in the previous year.

However, exports of steel also jumped. The country saw its exports jumping 10.3 per cent from 4.2 million tones in 2012 to 4.6 million tones in 2013.

Analysts expect domestic steel prices as well as margins under pressure in the coming months.

Bhaskar Basu, research analyst at DSP Merrill Lynch (India), said, "We expect domestic steel prices and margins to be under pressure post March quarter as demand seasonally slows post fourth quarter."

DSP Merrill Lynch remained cautious on India's domestic steel sector and maintained under-perform ratings on steel giants like SAIL, Tata and JSW.