India’s steel industry stands as a critical pillar of the nation’s industrial and economic framework. With consistent growth in production and consumption, the sector is poised to play a pivotal role in the country’s infrastructure development, economic expansion, and global competitiveness. According to the Economic Survey 2024-25, India’s steel sector has demonstrated resilience despite global economic fluctuations, driven by strong domestic demand and government-led infrastructure projects.
Rising production and consumption trends
From April to November FY24-25, India’s crude steel and finished steel production registered a growth of 3.3% and 4.6%, respectively. Despite occasional month-on-month fluctuations, the overall trajectory remains positive, fuelled by large-scale infrastructure initiatives and private sector investments. The government’s continued push for urbanisation, housing projects, and industrial expansion has bolstered domestic steel consumption, ensuring a steady increase in demand.
Infrastructure and policy support
The Indian government has played a crucial role in fostering growth within the steel sector through targeted policies and investments. The National Steel Policy (NSP) and the Production-Linked Incentive (PLI) scheme are instrumental in ensuring that domestic production meets rising demand. Additionally, large-scale public sector projects, including smart cities, highways, railways, and urban development schemes, have emerged as significant drivers of steel consumption.
Sectoral demand and contribution
Building and construction, along with infrastructure, accounted for approximately 68% of India’s total steel consumption in FY24. Engineering, packaging, and automotive industries collectively contributed to around 22%, while the automobile sector alone represented about 9%. The rise in infrastructure spending and an increased focus on domestic manufacturing have positioned steel as a key enabler of India’s industrial growth.
Challenges in export and import trends
While India has historically been a net exporter of steel, recent trends indicate a shift towards increased imports due to international price disparities. Between April and November FY25, India’s finished steel exports declined as domestic prices remained relatively higher than global rates. Conversely, cheaper imports entered the market, impacting local producers. The fluctuations in global steel prices, coupled with trade barriers and evolving economic policies, have made international trade a challenging space for Indian steel manufacturers.
Government initiatives for sustainability and green steel
The steel industry is a significant contributor to carbon emissions, making sustainability a top priority for policymakers. The government has introduced the Steel Scrap Recycling Policy to promote efficient recycling and reduce the industry’s carbon footprint. India consumes around 30 million tonnes (MT) of steel scrap annually, of which approximately 5 MT is imported. The increased focus on recycling aims to transition the industry toward green steel production, significantly reducing energy consumption, water usage, and greenhouse gas emissions.
Impact of global policies on India’s steel industry
The global steel market is witnessing structural shifts due to trade regulations, carbon emission targets, and economic uncertainties. The introduction of the Carbon Border Adjustment Mechanism (CBAM) by the European Union has the potential to impact Indian steel exports, as Indian producers may face additional compliance costs related to carbon footprint disclosures. Ensuring competitiveness in global markets will require Indian steelmakers to adopt cleaner production techniques and invest in sustainable manufacturing practices.
Investment and future growth prospects
With increasing domestic demand and policy-driven incentives, the Indian steel sector is attracting significant investments. Both public and private sector players are expanding capacity and upgrading technology to enhance efficiency and sustainability. As India moves toward becoming a $5 trillion economy, the role of steel in supporting infrastructure, manufacturing, and exports will be crucial.
India’s steel sector continues to be a driving force behind the nation’s industrial and economic progress. With robust government support, a strong domestic market, and growing investments in sustainable production, the industry is well-positioned for long-term growth. However, global trade challenges and environmental concerns necessitate a strategic approach to ensure that India remains a competitive and sustainable player in the international steel market. By focusing on innovation, sustainability, and policy-driven growth, the Indian steel sector is set to contribute significantly to the country’s economic ambitions in the coming years.
