Commerce Minister Nirmala Sitharaman said the yuan's fall would worsen India's trade deficit with China.
While the government would not rush into any action, it had discussed likely steps it could take to counter an expected flood of cheap steel imports with domestic producers and the Finance Ministry, she said.
The comments came a day after China allowed the biggest fall in the yuan in five months, pressuring regional currencies and sending global stock markets tumbling as investors feared it would trigger competitive devaluations.
"My deficit with China will widen," she told reporters.
India's trade deficit with China stood at about $27 billion between April and September last year compared with nearly $49 billion in the fiscal year ending in March 2015.
Domestic steel companies such as JSW Ltd have asked the government to set a minimum import price to stop cheap imports undercutting them.
A similar measure was adopted in 1999.
"We have done ground work but are not rushing into it," Ms Sitharaman said when asked if India would impose a minimum import price for steel.
© Thomson Reuters 2016