The Indian steel industry stands at a critical crossroads. From Donald Trump’s steep tariff hikes to dumping of surplus steel into India, global headwinds are mounting. Trade volatility, price pressures, and shifting supply chains threaten stability. Yet, with robust domestic demand, modernised capacity, and strong policy support, can India turn these challenges into a springboard for global steel leadership?
The Indian steel industry had been cruising steadily, buoyed by the government’s protectionist measures under consideration and the early success of the Production-Linked Incentive (PLI) scheme in boosting capacity and competitiveness. But the smooth sailing was abruptly disturbed by Donald Trump who, in trademark style, has hiked tariffs on steel and aluminium imports to 50%. The move – swift and sweeping – has unsettled global trade flows, leaving Indian exporters, policymakers, and market watchers scrambling to gauge the impact. While India’s direct steel exports to the US remain relatively small, the far greater concern lies in the likely diversion of surplus steel from other exporting nations into India, a scenario that could depress domestic prices and strain margins across the sector.
Trade dynamics
According to World Steel Association, the world crude steel production for the 70 countries was 151.4 million tonnes (Mt) in June 2025, a 5.8% decrease compared to June 2024. India produced 13.6 Mt of crude steel in June 2025, up 13.3% from June 2024. According to provisional government data cited in industry reports, India’s finished steel imports dropped by 27.6% in April–May compared to a year earlier, mainly due to sharp declines in shipments from China and Japan. Total imports during the two months stood at 0.9 million metric tonnes (Mt), with Chinese supplies falling 47.7% to 0.2 MT and Japanese supplies plunging 65.6% to 0.1 Mt. The decline followed the government’s April decision to impose a 12% temporary safeguard duty on certain steel imports to counter a surge in low-cost shipments, particularly from China. South Korea emerged as the top exporter to India in the period, increasing its shipments by 8.2% to 0.4 Mt. Together, China, Japan, and South Korea accounted for 74.4% of India’s finished steel imports, with hot-rolled coils or strips being the largest import category. On the export side, India remained a net importer of finished steel in April–May as outbound shipments fell 18.1% year-on-year to 0.8 Mt. Galvanised sheets and coils topped the export list, with Belgium becoming India’s largest customer, taking in 0.15 Mt – up 12.4% from the previous year. Exports to Italy plunged 53.7%, while shipments to Nepal and Spain rose. During the same period, domestic finished steel consumption climbed 7.1% to 25.1 Mt, supported by robust infrastructure demand, while crude steel production rose 9.5% to 26.9 MT.
The steel industry is a cornerstone of India’s economic development, contributing around 2% to GDP and directly employing nearly 600,000 people, with another 2 million working in allied sectors such as mining, logistics, equipment manufacturing, and services. As a foundational material for infrastructure and industrial growth, steel is both a barometer and driver of economic progress – underpinning bridges, railways, metros, ports, airports, power plants, pipelines, and real estate. Its performance is directly tied to India’s ambition of becoming a USD 5 trillion economy, where infrastructure expansion is a central pillar.
Trade trends & projections
According to ICRA, India is the world’s second-largest producer of crude steel, with output reaching 137.96 million tonnes (MT) of crude steel and 132.57 MT of finished steel in FY25 (April–February). During this period, domestic consumption stood at 137.85 MT, exports at 3.60 MT, and imports at 6.07 MT. Per-capita steel consumption reached 97.7 kg in FY24, a figure projected to grow sharply as infrastructure demand accelerates. The sector’s expansion has been fuelled by abundant domestic raw materials – particularly iron ore – cost-effective labour, and steady modernisation. India’s steel industry is now equipped with state-of-the-art mills and continues to upgrade older plants for greater energy efficiency.
Deloitte projects that steel demand in India will grow 5%–7.3% annually over the next decade, supported by mega infrastructure projects, government housing schemes, and a buoyant automotive sector. Since 2008, crude steel production has increased by 75%, while domestic demand has grown nearly 80% – a rise largely driven by organic capacity additions. Looking ahead, annual steel production is anticipated to exceed 300 MT by 2030–31, with crude steel output projected to reach 255 MT at 85% capacity utilisation, yielding 230 MT of finished steel. Net exports are expected to hit 24 MT, and domestic consumption could reach 206 MT, with per-capita use climbing to 160 kg. This positions India not just as a global steel powerhouse, but as a critical driver of the world’s future infrastructure needs.
Government Initiatives for the Steel Sector
Recognising the strategic role of steel in industrialisation, urbanisation, and infrastructure development, the Government of India has consistently pursued policy measures to strengthen the sector’s global competitiveness and domestic resilience. These initiatives address challenges ranging from overcapacity and import competition to environmental sustainability and technology adoption. One of the cornerstone policies is the National Steel Policy (NSP) 2017, which set an ambitious target of achieving 300 MT of annual crude steel capacity by 2030–31, with per-capita steel consumption rising to 160 kg. The policy emphasises self-sufficiency in steel production, reducing dependence on imports of critical inputs such as coking coal, and promoting value-added steel products. It also encourages the adoption of state-of-the-art technologies to improve energy efficiency and reduce carbon emissions.
The Production-Linked Incentive (PLI) Scheme for Specialty Steel, launched in 2021 with an outlay of ₹6,322 crore, aims to boost domestic manufacturing of high-grade steels such as coated steel, alloy steel, and stainless steel. The scheme is expected to attract investments worth over ₹39,000 crore and add 25 Mt of specialty steel capacity over five years, thereby reducing import reliance and enhancing export potential. In January 2025, the government rolled out PLI 1.1, easing investment thresholds, allowing carryover of surplus production, and reallocating unused funds from the earlier phase to spur greater participation. The revised scheme has already garnered strong industry response, with 42 MoUs signed by February 2025, signalling accelerated capacity expansion and technology adoption in the sector. To safeguard the industry against sudden surges of low-priced imports, the government has imposed temporary safeguard and anti-dumping duties on certain steel products, particularly from countries like China, Japan, and Vietnam. In April 2025, for example, a 12% safeguard duty was levied on specific flat steel products to protect domestic manufacturers from predatory pricing practices. On the infrastructure front, the government’s record allocation of ₹10 lakh crore in the Union Budget 2024–25 for capital expenditure has a direct multiplier effect on steel demand. Initiatives such as the Gati Shakti National Master Plan, PM Awas Yojana (housing), Bharatmala (roads), Sagarmala (ports), and the expansion of metro rail networks are expected to significantly boost steel consumption across sectors.
Environmental sustainability is also gaining prominence. Through the Mission on Advanced Ultra-Supercritical Technology and National Hydrogen Mission, the government is pushing for greener production pathways, including the use of hydrogen-based direct reduced iron (DRI) and carbon capture, utilisation, and storage (CCUS) technologies. The aim is to align the industry with India’s commitment to achieve net-zero emissions by 2070. Collectively, these measures not only provide a safety net during global market disruptions—such as the recent tariff shock from the US – but also position India’s steel sector for long-term, sustainable growth on the global stage.
Decarbonisation and net-zero initiatives in the steel sector
The steel industry, one of India’s most emission-intensive sectors, is undergoing a major transformation in line with the country’s goal of achieving net-zero emissions by 2070. Recognising steel’s significant contribution to national CO₂ emissions, the government and industry are working together to adopt cleaner, more energy-efficient production technologies. A key pillar of this transition is the National Green Hydrogen Mission, which promotes hydrogen-based direct reduced iron (DRI) to replace coking coal in steelmaking. Several pilot projects are testing hydrogen use in furnaces, marking the first steps toward large-scale green steel production. Complementing this effort, the Mission on Advanced Ultra-Supercritical Technology and energy-efficiency initiatives under the PAT scheme are driving reductions in fuel consumption and emissions intensity.
The government is also advancing carbon capture, utilisation and storage (CCUS) projects to mitigate unavoidable emissions from integrated steel plants. Meanwhile, the Steel Scrap Recycling Policy and the expansion of electric arc furnace (EAF) capacity are encouraging the use of scrap-based production, which generates far fewer emissions than conventional routes. Additionally, steel producers are increasingly integrating renewable energy sources like solar and wind for captive power, alongside waste heat recovery systems. Collectively, these measures reflect a decisive move toward low-carbon steelmaking, balancing growth with sustainability. While challenges remain in technology costs and scalability, India’s steel sector is steadily charting a pathway toward a greener, more resilient future.
Challenges and Outlook for India’s Steel Sector
Despite its robust growth trajectory and ambitious policy backing, India’s steel industry is not without its vulnerabilities. Price volatility is one of the most immediate concerns. International steel prices are closely tied to shifts in global demand, currency movements, and raw material supply dynamics—particularly the price of coking coal, which India imports heavily from Australia and, to a lesser extent, from the U.S. and Canada. A sudden spike in coking coal prices can erode margins for even the most efficient producers. The industry is also sensitive to freight rate fluctuations and supply chain disruptions, as witnessed during the pandemic and more recently during geopolitical tensions in the Red Sea and Eastern Europe.
Competition from low-cost imports continues to loom large. Although safeguard duties and anti-dumping measures have provided temporary relief, the possibility of surplus steel from countries like China, Japan, and South Korea being diverted to India—especially in the wake of tariff hikes by the U.S.—remains a persistent threat. Such influxes could depress domestic prices and lead to inventory pile-ups, straining working capital cycles for Indian producers. Smaller and mid-sized steel mills, which lack the financial resilience of large integrated players, would be especially vulnerable in such a scenario.
Environmental compliance poses another formidable challenge. The transition towards low-carbon steel production is capital-intensive and technologically demanding. With India setting ambitious net-zero targets, steelmakers will need to invest heavily in technologies such as green hydrogen-based direct reduced iron (DRI), carbon capture and storage (CCS), and electric arc furnaces (EAF). While leading companies like Tata Steel, JSW Steel, and ArcelorMittal Nippon Steel have already launched decarbonisation roadmaps, the broader industry—especially secondary steel producers—faces steep learning curves and funding constraints in adopting these innovations.
Workforce skill gaps also present a medium-term challenge. As the sector moves towards automation, digitalisation, and higher energy efficiency, there will be a need for large-scale upskilling and reskilling programs. Without them, the industry risks bottlenecks in implementing advanced manufacturing processes.
Yet, the long-term fundamentals remain strongly positive. India’s infrastructure buildout—driven by massive investments in railways, highways, ports, and urban development—will ensure steady demand for steel across construction, automotive, engineering, and energy sectors. With sustained policy support, capacity additions, and a growing focus on sustainability, India is well-positioned not just to meet its domestic requirements but to emerge as a global hub for green and specialty steels. The sector’s trajectory towards 300 million tonnes of annual production by 2030 will depend on how effectively it balances competitiveness, environmental commitments, and resilience to global market swings.
Resilience amid volatility
Looking ahead, the Indian steel industry stands at a critical inflection point. Global trade volatility, shifting supply chains, and geopolitical tensions will continue to test the resilience of domestic producers. The PLI scheme, safeguard duties, and infrastructure-led demand offer a buffer, but sustaining competitiveness will require deeper structural reforms—ranging from technological upgradation and energy efficiency to raw material security. Moreover, aligning production with low-carbon goals will be crucial as export markets impose stricter environmental norms. How India navigates this turbulent landscape will not only determine the fortunes of its steelmakers, but also shape the pace of its infrastructure build-out and, by extension, the country’s long-term growth trajectory.
