India's steel industry is entering a phase of unprecedented growth, with an expected annual capacity addition of 20 million tons between FY25-27, as per a recent report by Acuite Ratings & Research. This surge is being fueled by robust demand from critical sectors such as automotive, real estate, and infrastructure, which are driving an anticipated 8% growth in steel consumption over the medium term.

Driving Factors Behind Steel Demand

The automotive sector, propelled by increased production of electric and conventional vehicles, is a major consumer of steel. Simultaneously, the real estate boom and heightened investments in infrastructure projects under government initiatives like Make in India and the National Infrastructure Pipeline are creating sustained demand for high-quality steel.

Per capita steel consumption has seen a significant leap, doubling over the last decade from 59 kg in 2013-14 to 119 kg in 2022-23, reflecting a growing appetite for steel across multiple sectors.

Tackling Import Challenges

India’s steel industry, while on a growth trajectory, faces challenges from rising imports, particularly from China and Vietnam. China's excess capacity and sluggish domestic demand have led to a surge in exports to India. To protect local manufacturers, the Indian government has introduced higher tariffs on specific steel grades. These measures aim to curb imports and provide a competitive edge to domestic producers.

Environmental regulations and raw material price volatility further challenge the sector, requiring innovative approaches to maintain cost efficiency while adhering to sustainability norms.

A Decade of Production Growth

India’s crude steel production has witnessed remarkable growth, increasing from 109.1 million tonnes in 2019-20 to 144.3 million tonnes in 2023-24. This reflects a compound annual growth rate (CAGR) of 7.2%, supported by an expansion in production capacity from 142.3 MTPA to 179.5 MTPA during the same period. Such progress highlights India’s rising prominence in the global steel industry.

Addressing Future Challenges

While growth prospects are robust, the sector must navigate rising costs, evolving environmental regulations, and the need for technological advancements. Ensuring raw material availability, particularly iron ore and coking coal, remains a priority to sustain production levels and cost efficiency.

The government’s continued focus on developing the steel industry and enhancing export competitiveness is set to bolster the sector’s trajectory. With initiatives aimed at modernizing infrastructure and increasing production capacity, India is poised to solidify its position as a global leader in steel production.

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