India steps up steel capacity push, raw material security ahead of 2030 goals

The government will continue to prioritise higher steel production and raw material security in the coming year as India enters the final five years of its journey towards achieving an installed steelmaking capacity of 300 million tonne (MT) by 2030.

Alongside capacity expansion, the focus will remain on the adoption of low-carbon technologies, development of green steel capacity, and production of special and high-end steel grades to meet the evolving requirements of domestic industries and export markets, a steel ministry official said.

The renewed push comes at a time when India is the world’s second-largest crude steel producer, with demand supported by sustained infrastructure spending, housing, railways, automobiles, defence manufacturing and capital goods under government initiatives such as PM Gati Shakti, the National Infrastructure Pipeline and Make in India.

However, the industry is also preparing for continued challenges in 2025, including rising imports, volatile raw material prices and global trade uncertainties. Imports, particularly from Asian markets, remain a concern for domestic producers despite safeguard and anti-dumping measures already in place.

In May 2017, the government unveiled the National Steel Policy (NSP), targeting the addition of more than 200 MT of steelmaking capacity, with investments estimated at around Rs 10 lakh crore. The policy envisages actual steel production of 250 MT and per capita steel consumption of 160 kg by 2030–31.

Steel ministry data shows that India’s steel production capacity increased from 97 MT in 2012–13 to 138 MT in 2017–18 and has expanded steadily since then, supported by significant brownfield and greenfield investments by both public and private sector players.

According to data research firm BigMint, India’s installed steelmaking capacity stood at 235 MT as of November 2025 and is expected to remain at similar levels in FY26. Production is projected at 167 MT, compared with current levels of 110 MT. By March 2026, per capita steel consumption is estimated at 107 kg, up from 105 kg currently.

Based on these estimates, the country needs to add another 65 MT of capacity over the next five years to remain on track for the NSP targets.

A steel ministry official said the government has taken several steps to protect the domestic industry, including the imposition of safeguard and anti-dumping duties on imports of flat steel products from countries such as China and Vietnam.

To promote value-added steel production, the ministry has rolled out the Production Linked Incentive (PLI) scheme, offering fiscal incentives for manufacturing high-end and speciality steel used in sectors such as defence, power transmission, renewable energy, automobiles and aviation.

The government is also focusing on strengthening raw material availability. “New reserves of coking coal are being explored, and we are engaging with resource-rich countries to diversify sourcing,” the official said.

For iron ore, auctions are already underway and steelmakers have been encouraged to participate. The ministry is also promoting beneficiation and pelletisation of low-grade iron ore to improve resource efficiency.

With five years remaining to meet NSP targets, industry leaders said momentum must accelerate. Naveen Jindal, President of the Indian Steel Association (ISA), said India has made strong progress but requires faster execution.

“The pathway ahead demands sustained demand creation, policy stability and bold investments. These will determine whether India not only meets its goals but sets a new benchmark in competitive, low-carbon steelmaking,” said Jindal, who is also Chairman of Jindal Steel.

Industry body Assocham said that while government support has been significant, challenges such as rising coking coal costs, high logistics expenses, limited availability of railway rakes and infrastructure bottlenecks continue to weigh on the sector.

In the new year, Assocham expects a pickup in steel demand and does not anticipate further relaxation of quality control orders (QCOs). It also flagged increasing global trade barriers.

“Trade restrictions imposed by other countries on Indian steel exports are increasing. Some relief could emerge if free trade agreements with the EU and the US are concluded, supporting the domestic industry,” it said.

On the green steel transition, PHDCCI Secretary General Ranjeet Mehta said it remains a highly capital-intensive segment, with greenfield capacity requiring very large investments per tonne.

Referring to the European Union’s Carbon Border Adjustment Mechanism (CBAM), Mehta said that as global demand shifts towards low-carbon steel, Indian producers—many of whom rely on coal-based blast furnace routes—could face competitiveness challenges unless decarbonisation accelerates through technologies such as hydrogen-based direct reduced iron (DRI), higher scrap usage and renewable energy integration.

Meanwhile, ratings agency Icra has projected around 8 per cent growth in steel demand in FY26, although pricing pressures are expected to persist.

The industry has added a record 15 MT of capacity over the past three to four quarters, with another 5 MT likely by the end of FY2026. However, incremental demand of about 11–12 MT has lagged supply growth, resulting in a temporary surplus and softer domestic prices.

Commenting on price trends, Girishkumar Kadam, Senior Vice-President and Group Head, Corporate Sector Ratings at Icra, said domestic hot-rolled coil (HRC) prices have corrected sharply.

“Domestic HRC prices have declined from Rs 52,850 per tonne in April 2025 to around Rs 46,000 per tonne by November 2025, trading below import parity. Despite healthy underlying demand, pricing remains under pressure due to global headwinds and elevated Chinese exports,” Kadam said.