Indian steel industry records strong growth in FY 2025-26, faces emerging challenges
India’s steel sector delivered a strong performance in the financial year 2025-26, reinforcing its position as the world’s second-largest steel producer while navigating global uncertainties and cost pressures.
Driven by robust domestic demand and sustained infrastructure activity, the industry registered significant growth in production, consumption, and exports, according to provisional data.
Production and Demand on the Rise
The Ministry of Steel said India’s crude steel output grew by over 10.7% year-on-year to approximately 168.4 million tonnes during April-March, reflecting continued industrial momentum.
Domestic demand remained the primary growth driver, with finished steel consumption reaching about 164 million tonnes, marking a 7–8% increase. Key sectors such as infrastructure, construction, railways, and manufacturing contributed to the surge, supported by the government’s push for large-scale development and urbanisation.
Export Growth Restores Net Exporter Status
A standout feature of the year was the sharp rise in exports. Finished steel exports jumped by 35.9% to around 6.6 million tonnes, while imports declined by 31.7%.
This shift helped India regain its status as a net exporter of steel, strengthening its presence in global markets including the Middle East, Europe, and Southeast Asia. Improved competitiveness and market diversification further supported export growth.
Expansion Plans and Industry Investments
The sector continued to attract investments aimed at boosting capacity and upgrading technology. India’s total steel production capacity reached around 220 million tonnes in FY 2025–26 and is projected to grow to 300 million tonnes by 2030.
Major industry players such as Steel Authority of India Limited (SAIL), Tata Steel, and JSW Steel led expansion efforts, focusing on advanced technologies and value-added steel products.
Price Stability, Profit Pressures
Steel prices, which had declined over the past three years, showed signs of recovery in early 2026. However, profitability remained under pressure due to fluctuating raw material costs, particularly coking coal, and rising logistics and freight expenses.
Global price volatility and geopolitical tensions also contributed to margin constraints toward the end of the fiscal year.
Energy and Supply Challenges Emerge
The industry faced challenges from disruptions in gas supplies from the Middle East, leading to shortages of industrial fuels such as LPG. This raised concerns over production continuity for several manufacturers.
To mitigate the impact, the government stepped in by increasing LPG allocations to critical sectors, including steel.
Rising energy costs and supply chain disruptions further highlighted the sector’s vulnerability to global shocks.
Strong Linkages with Core Sectors
The growth in steel demand also drove higher logistics activity, with increased freight movement reported by Indian Railways. Expansion across core industries – such as cement, electricity, and coal – reflected sustained industrial activity and reinforced steel’s central role in economic growth.
Outlook Remains Positive
Looking ahead, the Indian steel industry is expected to maintain its growth trajectory, supported by strong domestic demand, ongoing infrastructure projects, and policy support.
However, challenges related to energy security, input costs, and global market fluctuations will need careful management.
With continued investments and a growing focus on green steel technologies, the sector is well-positioned to remain a key pillar of India’s industrial and economic development.
