JSW Steel and JFE Steel to invest ₹5,800 crore in India to expand electrical steel manufacturing: A strategic move to meet growing energy needs

In a major step towards boosting India’s self-reliance in advanced steel manufacturing, JSW Steel Limited and Japan’s JFE Steel Corporation have announced a joint investment of ₹5,800 crore (₹58 billion) to scale up electrical steel production in India. This decision underlines the increasing demand for specialised steel used in electric vehicles (EVs), power transformers, and energy infrastructure.

The investment will be made through their joint venture, JSW JFE Electrical Steel Private Limited, with both companies contributing ₹1,966 crore each as equity toward the expansion, JSW Steel confirmed in a statement.

What is Electrical Steel and Why It Matters

Electrical steel—also known as silicon steel or lamination steel—is a specialised type of steel designed to produce high magnetic permeability and low power loss. It is a critical component in motors, generators, transformers, and electric vehicles.

With India’s rising focus on green mobility, renewable energy, and power infrastructure, the demand for high-grade electrical steel has surged dramatically. Domestic production capacity, however, remains limited, forcing companies to rely on imports—mostly from Japan, Korea, and China.

By expanding its electrical steel output, JSW JFE aims to localise supply, reduce dependency on imports, and support India’s Make in India and Atmanirbhar Bharat initiatives.

Breakdown of the ₹5,800 Crore Investment

According to JSW Steel:

• The total capital outlay for the electrical steel expansion is ₹5,800 crore.

• ₹1,966 crore will be infused as equity by each partner, i.e., JSW Steel and JFE Steel.

• The balance will be funded through internal accruals, debt, or further instruments as required.

• The expansion project will be carried out under JSW JFE Electrical Steel Pvt. Ltd., their 50:50 joint venture.

This equity infusion represents the partners' long-term commitment to building world-class manufacturing infrastructure for critical materials in India.

Expected Production Capacity and Applications

The expansion aims to significantly increase the production of non-grain oriented (NGO) and grain-oriented (GO) electrical steel, which is primarily used in:

• Electric motors and alternators

• Power transformers and distribution equipment

• Electric vehicles and charging stations

• Smart grids and renewable energy installations

JSW and JFE have not disclosed the exact incremental capacity that will be added, but sources suggest that the plant will aim to triple the existing output, with a focus on higher efficiency grades of steel.

Strategic Importance of the JSW-JFE Partnership

The partnership between JSW Steel and JFE Steel is not new—it dates back to 2009, when the two steelmakers joined hands to bring high-grade automotive and specialty steels to the Indian market.

JFE Steel, one of Japan’s largest and most technologically advanced steel producers, brings deep expertise in precision rolling, alloy technology, and quality control, which complements JSW’s scale, access to raw materials, and market presence in India.

This latest investment strengthens their collaboration and reinforces India as a manufacturing hub for critical industrial inputs.

Rising Demand for Electrical Steel in India

The demand for electrical steel is being fuelled by multiple factors:

• India’s EV market is growing at an exponential pace, with ambitious government targets for adoption by 2030.

• The power sector is undergoing modernisation with the introduction of smart meters, transformers, and grid upgrades.

• Industrial automation and consumer appliances also use high-efficiency motors made from electrical steel.

• Renewable energy projects require transformers and generators built with grain-oriented electrical steel.

With most domestic electrical steel manufacturers still in early stages, the JSW-JFE venture will play a pivotal role in reducing the technology gap.

Government Support and Policy Alignment

This investment aligns with key government initiatives:

• Production Linked Incentive (PLI) scheme for specialty steel

• Make in India and Atmanirbhar Bharat campaigns

• Faster adoption of Electric Vehicles (FAME II)

• National Smart Grid Mission and power sector digitalisation

State governments are also expected to support the project by offering land, power incentives, and infrastructure support to ensure a faster rollout and commissioning.

Timeline and Project Execution

Although detailed timelines have not yet been revealed, analysts expect the project to unfold as follows:

• Planning and design phase (0–6 months)

• Procurement of advanced machinery and technology from JFE (6–12 months)

• Construction and plant commissioning (12–24 months)

• Full commercial operations by FY28, subject to regulatory approvals and market dynamics

Once operational, the expanded facility will be among India’s largest and most advanced electrical steel plants.

Impact on JSW Steel’s Market Position

JSW Steel is already one of India’s top three steel producers, with a growing footprint in value-added and downstream steel products. With this expansion:

• It strengthens JSW’s portfolio in niche high-margin segments

• Opens up export opportunities in the Middle East, Africa, and Southeast Asia

• Reduces import bills for electrical steel significantly

• Positions JSW as a global supplier of energy-efficient materials

Market analysts believe this strategic move could help JSW Steel maintain its edge over other domestic producers like Tata Steel and SAIL in the specialty steel category.

Environmental and Efficiency Goals

The production of electrical steel requires high energy input and precision rolling, but it contributes to long-term energy efficiency in appliances and infrastructure.

JFE’s technology is expected to ensure:

• Reduced waste and higher energy efficiency

• Better quality control through automation

• Lower carbon footprint compared to traditional processes

This makes the expansion not only a commercial success but also a sustainable step for India’s green future.

The Upcoming IPOs in this week and coming weeks are ConnPlex Cinemas, ALL Time Plastics, JSW Cement, Sawaliya Foods Products, ANB Metal Cast, Highway Infrastructure.

The Current active IPO are Parth Electricals & Engineering, Jyoti Global Plast, Essex Marine, Aaradhya Disposal Industries, BLT Logistics, Bhadora Industries, Flysbs Aviation, Cash Ur Drive Marketing, Renol Polychem.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.