Finance Minister Nirmala Sitharaman has unveiled a roadmap to scale India's steel capacity to 604 million tonnes by 2047, emphasizing decarbonization and specialty steel production. While infrastructure spending supports domestic demand, the industry faces significant challenges, including a 92% reliance on imported coking coal and the high costs of transitioning to green energy.
Finance Minister Nirmala Sitharaman has set a clear long-term target for the domestic steel sector, aiming to reach a crude steel production capacity of 604 million tonnes by 2047. Addressing the World Steel Association General Assembly in New Delhi on October 12, 2026, the Minister detailed a five-pillar strategy aimed at modernizing the industry. The roadmap prioritizes decarbonization, the growth of high-value specialty steel, and the expansion of local production to reduce reliance on imports.
The government's push for expansion is driven by the gap between India's per capita steel consumption and the global average. With India’s current consumption at approximately 109 kg, significantly trailing the global benchmark of 209 kg, policymakers see a massive growth opportunity. This trajectory is being supported by robust public capital expenditure, which has been set at ₹12.2 lakh crore for the current fiscal year. Large-scale infrastructure and construction projects, which consume the majority of the country's steel output, remain the primary engine for this growth.
The Shift to Green and Specialized Production
To move beyond basic steel manufacturing, the government is incentivizing the production of high-grade and specialty steel. A Production Linked Incentive (PLI) scheme, with an outlay of ₹6,300 crore, is currently in place to encourage domestic players to adopt advanced manufacturing technologies. This initiative aims to help Indian firms integrate into the global supply chain, reducing the country's dependence on specialized steel imports.
However, the transition involves significant structural challenges. A major hurdle is the carbon intensity of Indian steel production. As global markets implement carbon border adjustment mechanisms, domestic producers face pressure to lower emissions to remain competitive internationally. The path to green steel, often involving hydrogen-based production, currently remains expensive and requires substantial technological and financial support that is still in the developmental stage.
Challenges in Raw Material and Costs
Beyond environmental goals, the sector continues to grapple with supply chain vulnerabilities. Indian steelmakers rely heavily on imported coking coal—approximately 92% of the requirement is sourced from abroad—leaving manufacturers exposed to global price volatility and supply disruptions. Additionally, the industry is currently navigating a period of fluctuating raw material costs, logistical expenses, and the impact of recent capacity additions.
Looking ahead, investors and stakeholders will be tracking the progress of the National Steel Policy Vision 2047. Key monitorables include the actual commissioning timelines for new capacity, the success of companies in adopting lower-carbon production methods, and how the industry manages its high dependency on imported coking coal while attempting to stabilize profit margins amidst global price fluctuations.