India's steel industry is poised for significant growth, with an additional 20 million tons of annual capacity projected between FY 2025 and FY 2027, according to a report by Acuite Ratings & Research. The report outlines a positive medium- to long-term outlook for the sector, driven by robust demand from the automotive, real estate, and infrastructure industries. Steel demand in India is expected to grow by 8% over the medium term.
Despite margin pressures, the report highlights sustained capacity expansion in the industry. However, challenges remain, including a rise in imports from Asian countries like Vietnam and China. The influx of low-cost steel, fueled by China’s surplus capacity and weak domestic demand, poses a threat to Indian manufacturers. Acuite noted that Chinese iron and steel exports grew 22% year-on-year during April-September 2024, exacerbating risks for Asian and European markets.
To counter these challenges, India has introduced higher tariffs on specific steel imports from countries like China and Vietnam. “Trade protection measures, including increased tariffs, are being implemented to support domestic manufacturers and safeguard local production,” said Suman Chowdhury, Chief Economist and Executive Director at Acuite Ratings.
Chowdhury also emphasized the industry’s vulnerability to price volatility in key raw materials such as coking coal and iron ore. Rising environmental and regulatory costs are expected to further impact cost efficiency in the sector.
India’s steel consumption increased by 3.6% year-on-year in FY 2023-24, with per capita consumption doubling over the past decade—from 59 kg in 2013-14 to 119 kg in 2022-23, according to the Ministry of Steel. Crude steel production rose from 109.1 million tonnes (MT) in 2019-20 to 144.3 MT in 2023-24, reflecting a compound annual growth rate (CAGR) of 7.2%. Over the same period, production capacity expanded from 142.3 million tonnes per annum (MTPA) to 179.5 MTPA, underpinning the sector's growth trajectory.
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