India’s Steel Sector Advances Towards Self-Reliance

Introduction:

The steel sector is recognized as a vital “sunrise sector” and a primary engine of India’s macroeconomic growth. Driven by robust domestic demand across various sectors steel consumption has more than doubled over the past 12 years by reaching 163.7 MT in FY 2025-26. The state has pivoted toward a highly coordinated, policy-driven approach to boost high-value specialty steel production and achieve a 500 MT capacity target by 2047.

Sector Performance

India’s steel production exhibits broad-based expansion, maintaining a solid core index growth of 9.1% in FY 2025-26. The sector’s core metallurgical output is classified across specific value chains:

• • Crude Steel: Serving as the foundational raw alloy, crude steel production rose to 168.4 MT in FY 2025-26, clocking a ~9% Compound Annual Growth Rate (CAGR) over the last four years.
  • Finished Steel: Hot rolling and downstream forging processes yielded 160.9 MT of finished steel in FY 25-26, growing 9.7% year-on-year.
  • Iron Intermediaries: Direct-reduced iron forms displayed high capacity utilization between April and September of FY 2025-26:

The Changing Trade Narrative

India’s structural trade dynamic is reversing. In March 2026, steel exports surged by 29.1% year-on-year (led by finished steel shipments to Vietnam, Belgium, and Taiwan), while imports plummeted by 9.5%. This reflects a more resilient, cost-competitive domestic manufacturing base capable of substituting foreign supplies.

Statutory Reforms and Regulatory Frameworks

The Union Government operates a multi-pronged, facilitative policy architecture to strengthen supply-side resilience:

1. PLI for Specialty Steel (Pillars 1.0, 1.1, and 1.2)

Initially launched to catalyze value-added downstream capabilities, the scheme offers incentive rates ranging from 4% to 15%. Under the newly rolled out PLI 1.2 round (November 2025), MoUs have been inked for 85 projects across 55 companies, targeting an investment commitment of ₹11,887 crore for strategic and commercial steel grades.

2. Indigenization and Procurement Policies

• • DMI&SP Policy (Revised May 2025): Mandates rigid domestic content preferences in public procurement while providing strategic customs duty exemptions on critical capital imports for manufacturing units.
  • The “Melt and Pour” Rule: To eliminate grey-market re-rolling bypasses, this rule mandates that to qualify as a domestic product, steel must undergo its initial melting and pouring phases entirely within India.
  • Quality Control Orders (QCOs): Bureau of Indian Standards (BIS) compliance has been made mandatory across 143 QCOs covering 723 products, actively blocking sub-standard imports.

3. Logistics and Upstream Inputs

• • PM GatiShakti Integration: Geolocation data for more than 2,100 functioning steel units has been uploaded onto the national platform to enable coordinated, data-driven freight planning.
  • Mission Coking Coal: Aiming to scale raw domestic coking coal extraction to 140 MT by FY 2029-30 to reduce the historically high 85% import dependency down to 65%.

Challenges:

• • High Operational Capital Costs: The Hindu reports that while secondary steel producers and MSMEs have access to the SARAL-SIMS registration portal, the capital cost required to upgrade existing blast furnaces to high-efficiency Best Available Technologies (BAT) remains a severe financial hurdle.
  • Scrap Supply Inelasticity: ORF notes that transitioning to eco-friendly electric arc furnaces requires high-quality ferrous scrap. India’s domestic scrap collection mechanism is highly unorganized, keeping the country dependent on importing nearly 5 MT of external scrap annually.
  • Tariff and Border Adjustment Vulnerabilities: PRS Legislative highlights that despite the imposition of a 12% safeguard duty on steel flat products, Indian steel exporters face impending structural barriers in western markets due to carbon boundary regulations (such as the EU’s Carbon Border Adjustment Mechanism), necessitating immediate green scaling.

Way Forward:

The Ministry of Steel has deployed a phased decarbonization framework to mitigate the industry’s carbon footprint:

• • Short-Term (Towards 2030): Maximizing energy-resource efficiencies, implementing Quality Control Orders, and scaling renewable energy penetration across manufacturing nodes to 45%.
  • Medium-Term (2030–2047): Commencing commercial Green Hydrogen-based steelmaking and utilizing the ₹20,000 crore CCUS outlay proposed in the Union Budget to construct industrial carbon-trapping infrastructure across major clusters (e.g., Kalinganagar, Angul, Bhilai, Rourkela).
  • Long-Term (2047–2070): Deepening alternative technology pathways to achieve a finished steel carbon intensity of less than 2.2 tonnes of $\text{CO}_2\text{e}$ per tonne of steel, moving toward an absolute net-zero footprint.
  • The “AI in Steel Pavilion”: Transitioning from basic automation to a mission-mode deployment of machine learning to optimize real-time logistics, scrap sorting, and furnace thermal dynamics.

Conclusion

India’s steel sector has evolved into a self-reliant powerhouse, successfully matching massive domestic consumption with an expanding export footprint by balancing immediate production milestones under the National Steel Policy with forward-looking climate commitments via the Green Steel Taxonomy.