From infrastructure and manufacturing to exports and green technology, India’s proposed steel policy outlines a major industrial expansion. But raw material security, investment requirements, global competition and decarbonisation will determine whether the targets can be achieved.
India is preparing for an industrial expansion that could fundamentally alter the scale of its manufacturing economy. The Ministry of Steel’s draft National Steel Policy–Vision 2047 proposes increasing the country’s crude steelmaking capacity from approximately 220 million tonnes annually to 604 million tonnes by 2047.
The nearly threefold expansion would require substantial investments in steel plants, mining, transportation, energy infrastructure and advanced manufacturing technologies. More importantly, it would test India’s ability to combine industrial growth with international competitiveness, resource security and environmental sustainability.
Released for public consultation on October 10, the draft policy projects finished steel consumption increasing from 164 million tonnes to 505 million tonnes by 2047, while per capita consumption would rise from 116 kilograms to 302 kilograms.
Crude steel production is projected to reach 531 million tonnes, supported by an assumed capacity utilisation rate of 88%. The policy also envisages steel exports reaching 45 million tonnes. These projections are based on expectations of sustained economic expansion, with GDP growth assumed at approximately 7% annually.
Stakeholders have until October 30 to submit their suggestions before the government finalises the policy framework.
Steel’s importance in India’s economic development
Steel occupies a distinctive position in industrial development because its demand extends across virtually every major sector of the economy. Roads, bridges, railways, ports, airports, power transmission networks, industrial machinery, automobiles and residential buildings depend on different categories of steel.
As India expands its infrastructure and manufacturing capabilities, domestic steel availability will influence construction costs, industrial productivity and the competitiveness of downstream industries. The sector also generates employment across mining, logistics, engineering, fabrication and equipment manufacturing, extending its economic contribution considerably beyond steel production itself.
India’s steel industry has already undergone significant expansion. According to the Ministry of Steel, crude steel production increased from approximately 89 million tonnes in 2014-15 to 170 million tonnes in 2025-26, while finished steel consumption rose from 77 million tonnes to 164 million tonnes. India is now the world’s second-largest crude steel producer, accounting for approximately 8.9% of global production.
Nevertheless, domestic per capita consumption remains considerably below the global average of approximately 209 kilograms, indicating substantial potential for growth as urbanisation, infrastructure development and manufacturing investment accelerate.
The draft policy recognises that expanding production capacity alone will not guarantee industrial competitiveness. India must also develop capabilities in high-grade electrical steel, automotive steel, advanced alloys and specialty products required by defence manufacturing, renewable energy, aerospace and sophisticated engineering industries.
Greater domestic availability of these products could reduce import dependence while supporting the government’s manufacturing and technological self-reliance objectives. However, developing such capabilities will require investment in research, metallurgical expertise, specialised equipment and collaboration between steel producers, technology institutions and downstream manufacturers.
Raw materials and infrastructure: The expansion challenge
One of the most difficult challenges concerns raw material security. The draft projects India’s iron ore requirement increasing from approximately 299 million tonnes to 772 million tonnes by 2047, while coking coal demand could rise from 72 million tonnes to 236 million tonnes.
Although India possesses substantial iron ore resources, it imports nearly 92% of its coking coal requirement. With raw materials accounting for approximately 65–70% of steelmaking costs, dependence on international supplies exposes producers to commodity price fluctuations, geopolitical disruptions and transportation uncertainties.
The policy consequently proposes overseas mining acquisitions, joint ventures, diversified sourcing arrangements and improvements in domestic mineral processing.
Infrastructure presents another substantial challenge. New steelmaking capacity will require reliable electricity, adequate water, efficient freight corridors, expanded railway capacity and improved port connectivity. The draft proposes using PM Gati Shakti to coordinate industrial locations with mineral availability and transportation networks.
It also envisages expanding slurry pipelines and increasing the share of iron ore and finished steel transported by rail. These measures could reduce logistics costs, but their implementation will depend on coordination among central ministries, state governments, infrastructure agencies and private investors. Land acquisition, environmental clearances and financing constraints could affect project timelines.
The environmental challenge
The proposed expansion also raises questions about India’s climate commitments. Steelmaking is among the most carbon-intensive industrial activities, particularly when production relies on coal-based technologies. The draft seeks to reduce average carbon dioxide emissions intensity from approximately 2.54 tonnes per tonne of crude steel to 1.54 tonnes by 2047, a reduction of nearly 39%.
Proposed interventions include renewable electricity, improved energy efficiency, greater scrap utilisation, hydrogen-based direct reduced iron production and carbon capture technologies.
However, reducing emissions intensity does not necessarily mean reducing total emissions. Based on the draft’s production and emissions-intensity projections, annual steel-sector emissions could increase from approximately 432 million tonnes of carbon dioxide to around 818 million tonnes by 2047.
This illustrates the difficulty of expanding industrial production while pursuing decarbonisation. Cleaner technologies will require considerable capital expenditure, affordable low-carbon electricity and commercially viable alternatives to conventional coal-based processes. International carbon-border measures, particularly in European markets, will add pressure on Indian producers to demonstrate the environmental performance of their products.
Competitiveness, investment and the road ahead
Global competition represents another important consideration. India’s steel producers face competition from imported products, including relatively inexpensive supplies from countries with substantial surplus capacity. During April–August 2026, India’s finished steel imports increased by 29.5% year-on-year to approximately 3.5 million tonnes.
While domestic manufacturers have sought stronger protection against imports, excessive trade restrictions could increase costs for automobile manufacturers, construction companies and engineering industries that depend on competitively priced steel. Policymakers must therefore balance the interests of domestic producers with those of steel-consuming industries. Reuters
The draft also identifies modernisation of secondary steel producers, digitalisation, automation and improved industrial safety as priorities.
These measures are important because smaller manufacturers contribute significantly to India’s steelmaking capacity but often face limitations in technology adoption, energy efficiency and access to finance. The proposed Steel Industry Safety Council and digital innovation initiatives could help improve operating standards and productivity.
However, successful implementation will require accessible financing mechanisms, technological support and measurable performance benchmarks rather than regulatory prescriptions alone.
The 604-million-tonne target represents an ambitious industrial objective, but its economic value will ultimately depend on how efficiently and competitively that capacity is developed and utilised. The draft provides a long-term direction for the steel industry; the next requirement is a credible implementation framework covering investment, raw materials, logistics, technology and emissions reduction.
India’s development ambitions will undoubtedly require considerably more steel. Whether the industry can supply that steel at competitive prices, with improving quality and a progressively smaller environmental footprint, will determine the policy’s contribution to the country’s economic transformation.
