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India remains the bright spot in the global steel ecosystem with a steady growth in domestic demand and a projected healthy future growth. The steel demand in the

country is estimated to grow at 9% in both 2025 and 2026 compared to a decline in 2025 and just 1.3% growth in 2026 in global demand, according to the Short Range Outlook of the World Steel Association (WSA), released last October. Indian steel demand will continue to grow in the coming months driven by persisting growth in all steel using sectors, the report said.

Vindicating the WSA’s observation, India's crude steel production has grown by a huge 10.5% during the first nine months of calendar 2025, between January and September, compared to the same period a year ago. Significantly, among the top ten global steel producers, the US was the only second country that witnessed an increase in production (2.6%) during this period. China, the global leader with more than half of the world's production , registered a decline of 2.9% during January-September 2025 against the same period of 2024. The aggregate global steel production has declined by 1.6% during the period.

India is the world’s second-largest producer of steel, with an output of 151.14 million tonnes of crude steel production in 2024-25. The growth has been steady and persistent with the steel production increasing by more than two and a half times during the last ten years.

Higher steel production does not only indicate India’s bigger role in the global production ecosystem, it reflects the country’s ongoing industrial and infrastructure development activities. One of the primary forces behind industrialisation was the increasing use of metals. Steel has traditionally occupied the top spot among metals. Steel production and consumption are seen as measures of a country's economic development because it is both a raw material and an intermediary product.

Steel is an important multifunctional and adaptable material that plays a key role in making lives convenient. Being the basic raw material of a large number of manufacturing activities steel forms the backbone of national economic development. The industry is often considered as an indicator of the economic progress because of the critical role it plays in infrastructural and industrial development of a country.

Steel production rising 

India's steel industry  although boasts of ancient roots, seen in artefacts like the Iron Pillar of Delhi, but its modern growth began with Jamsetji Tata founding the first iron and steel plant, Tata Iron and Steel Company at Jamshedpur in Jharkhand (then Bihar) with a production capacity of one lakh tonnes in 1907. It’s part of the history now. Tata Steel has grown manifolds over the years and is now among the top steel producing companies in the world with an annual crude steel capacity of 35 million tonnes.

The story of India’s steel industry is a testament to a remarkable transformation, reflecting the nation's broader economic journey. Once a marginal player in the global production system the industry has now become the world’s second-largest steel producer. This shift is emblematic of India’s successful journey towards self-reliance and sustainable industrialisation.

But if Tatas were the pioneers, the sector was revolutionised after the entry of the public sector investment with the beginning of the planning era. Aiming to build heavy industrial capacity key public sector plants at Rourkela, Bhilai and Durgapur were established with foreign collaboration, culminating in the 1973 formation of Steel Authority of India (SAIL) to manage these public assets. As of FY2024–25, India's crude steel production capacity has reached approximately 205 million tonnes annually. Backed by a steady rise in production capacity India has now become the second biggest producer of steel after China. In about a decade India’s steel production has increased by more than two and a half times from about 60 million tonnes in 2013-14 to 151.14 million tonnes in 2024-25. New Delhi is now talking of more than doubling the present production to 300 million tonnes per annum by 2030.

With increasing production and growing demand the steel industry in India has expanded its role in the economic development of the country. The industry contributes significantly to India’s manufacturing base and continues to modernise facilities with new and efficient technology. Steel is vital for infrastructure development, including roads, bridges, railways, pipelines and urban facilities, enhancing productivity and economic competitiveness.

With increasing production and large-scale capacity expansion the industry has become a significant contributor to the country’s economic progress and employment market. The Indian steel industry has a significant employment multiplier of 6.8x, meaning every job directly created in the steel sector supports nearly 7 additional jobs in supporting industries. The output multiplier of steel manufacturing is estimated at 1.4x. The sector has turned into a major economic engine, contributing approximately 2.5% to India's GDP, with over 6 lakh direct employees and 20 lakh indirect jobs. 

Higher GDP growth pushing steel demand

A well developed infrastructure is a key index of a country’s economic position at the global stage. An efficient infrastructure network augments a country’s productivity, making firms more competitive and boosting the overall economy. Steel is the prime component to that end as it is required to build physical infrastructure like roads, railway lines, buildings and bridges and to lay new pipelines for gas, water and sanitation..

After becoming the world’s second-largest crude steel producer India is now expected to become the second largest consumer too with the unprecedented emphasis given by the government to push infrastructure growth. The Indian steel market in fact, has been growing sharply in recent years with an investment boom. Steel consumption across industries, including automotive and transportation, building and construction, consumer goods and engineering has been growing with rising demand for end-goods.

The credit rating agency, Icra has projected India's steel demand to grow by about 8% in FY2026 and FY2027, driven by robust consumption in infrastructure and construction. This growth, would amount to an estimated 11-12 million tonnes, will continue despite increased, and potentially oversupplied, and market conditions. During the first half of 2025-26 steel consumption in the country has grown by about 8.4%.

The government is engaged in a massive, ongoing, long-term project to redevelop over 1,300 railway stations under the Amrit Bharat Station Scheme, with significant progress expected to materialize by early 2026. This initiative focuses on converting stations into modern city-centre hubs with enhanced amenities, improved safety, and better passenger comfort, with an estimated expenditure of over Rs.25,000 crore. 

The Indian railways received a total capital expenditure (Capex) outlay of Rs 2.65 lakh crore  The budget emphasized safety, infrastructure and modernization of structural base which would inflate steel demand. Likewise, the investment on critical transportation infrastructure projects to connect ports, coal, steel, fertiliser, and food grain sectors across the first- and last-mile delivery network too would increase steel demand. Budget has also allocated funds for urban planning development projects to transform cities into sustainable cities.

Backed by a steady infrastructure growth the aggregate steel consumption in the country had grown by over 10% to 150.20 million tonnes 136.29 million tonnes in 2023-24. This was a huge jump from 94.89 million tonnes in 2020-21 following the pandemic.

The scope for growth is enormous as the per capita steel consumption in India is one of the lowest in the global template. While the apparent per capita average steel consumption in the world is around 214 kg in 2024, it was only 102.6 kg in India. What is significant, however, is that when in the post-pandemic period the per capita global consumption declined, it increased sharply in India. In four years, between 2020 and 2024, the per capita consumption of steel has increased by a huge 60.3% against a decline of 6% of global average. The increase in steel consumption in India was largely because of massive infrastructure investment made by the government to recover the economy from the pandemic shock.

The high consumption growth is expected to improve the industry's capacity utilisation rate despite commissioning of some new expansion projects, Icra has predicted. India’s growth prospect would look even healthier when compared against the global scenario. According to the World Steel Association (worldsteel), a body with membership of every steel producing country, the global demand for steel is feared to witness a decline of about 1.3% in 2026.

National Steel Policy

Steel is a deregulated sector and the government’s role is that of a facilitator for fostering steel consumption in the country. In that direction, the government has brought National Steel Policy (NSP), 2017 which envisages per capita steel consumption to increase up to 160 kg by 2030-31. The government is actively promoting the steel industry, aiming for 300 million tonnes of production capacity by 2030-31 to sustain the consumption trend.

To reduce import dependence the government has introduced production linked incentive scheme designed to boost the manufacturing of "specialty steel", attracting investments with a goal to reach 42 million tonnes by 2026-27.

NSP 2017 aims to increase focus on expansion of MSME sector, improve raw material security, enhance R&D activities, reduce import dependency and cost of production, and thus develop a “technologically advanced and globally competitive steel industry that promotes economic growth” eyeing self-sufficiency in production, developing globally economical steel manufacturing capabilities by facilitating investments and cost efficient productions with adequate availability of raw materials. With focus on R&D, the technology would be of utmost focus over the next decade and MSME steel plants would be the key drivers to achieve the additional capacity required for India's consumption-led growth and improvement in the overall productivity and quality. Steel mills are seeking a re-imposition of anti-dumping duties on select popular products like coated hot rolled flat steel products, cold rolled flat steel products, colour coated flat steel and wire rods.

Challenges ahead

The government’s heightened focus on physical infrastructure development has seen steel demand in the country to increase rapidly of late, but a key challenge could hamper the growth of the sector, which is directly and closely linked to the overall economic development of the country. 

Like most other industries, logistics and supply chain management remain key areas of challenge for the steel industry. The main raw materials for making steel are iron ore and coking coal. Both these are bulk materials while the finished product i.e., steel is also a bulk material. Meaning, they are not regular goods to be transported and need to be handled differently.

A report by global consulting major Deloitte states that raw material availability is going to be a key challenge as captive leases will expire by 2030. Slow process of iron ore mine allocation and intermittent mining bans across a few states are also impacting the sector, the report says.

The USA has levied high tariffs on India, potentially affecting a significant portion of Indian exports. The move places India among the most heavily penalized nations under the new tariff regime. Ongoing trade negotiations between India and the USA aim to address these concerns. However, the move is expected to affect, at least in the short run, exports of certain value-added steel to the USA among other goods.  

The import of cheap steel is another problem that is affecting the financials of domestic steel makers. In fact, steel mills are seeking a re-imposition of anti-dumping duties on select popular products like coated hot rolled flat steel products, cold rolled flat steel products, colour coated flat steel and wire rods. During the last two years India was a net importer of steel. In 2024-25 India imported 9.5 million tonnes of finished steel against an export of 4.9 million tonnes.

Another big challenge for the Indian steel industry is the decarbonisation issue. With growing global concerns over climate change, regulators, investors, and industrial customers are increasingly pushing steelmakers to increase their sustainability by pursuing decarbonisation pathways. To speed up the process the sector would require incremental and breakthrough technologies.

The three facets of sustainability as represented by environment, economy, and society in the steel industry are directly connected to the efficient and effective management of energy and resources, such as raw materials, by-products and water.

In keeping with the Indian government’s COP26 commitments, the ministry of steel has invited the stakeholders to prepare an action plan targeting the reduction of emissions in the steel industry. On an annual basis, the global iron and steel industry accounts for around 8% of total carbon dioxide (CO2) emissions.

The industry accounts for 12% of total national CO2 emissions in India. The Indian steel industry has increasingly implemented cutting-edge clean technologies, improving raw material quality, increasing fuel economy, and creating a carbon  sink in recent years to make steel making more environmentally friendly.