Steel 300: From Ore to Opportunity Amid Global Challenges
Executive Summary
India’s steel sector, a cornerstone of its industrial and economic development, is on an ambitious path to achieve 300 million tonnes per annum (MTPA) crude steel capacity by 2030–31. Currently the world’s second-largest steel producer, India is driving this transformation amid robust infrastructure demand, policy support, and global supply chain realignments. Despite significant growth, the nation’s per capita steel consumption remains below the global average, offering considerable headroom for expansion.
The National Steel Policy 2017 outlines this 300 MTPA vision with a production target of 255 MTPA. As of FY25, India has reached an installed capacity of 205 MTPA. However, progress is challenged by issues like iron ore beneficiation requirements, 85% reliance on imported coking coal, limited steel scrap availability, and high CO₂ emission intensity in steelmaking. The country also faces headwinds from Chinese low-cost exports, EU safeguard duties, and upcoming carbon tariffs.
To achieve its goal, India must address five key enablers: accelerated investments in green and value-added steel, infrastructure and raw material linkage improvements, clean technology adoption, policy reform for financing and approvals, and a strong public–private execution model.
India’s 300 MTPA steel ambition is not just an industrial goal but a strategic move toward self-reliance, global competitiveness, and climate leadership. Overcoming resource, policy, and trade challenges through innovation and sustainability will be key to positioning India as a global hub for green and specialty steel, supporting its $5 trillion economy vision.
Introduction
Steel is a cornerstone of India’s industrial and economic development, functioning both as a primary sector output and a vital input for secondary industries. As a core sector, it has strong backward linkages with mining (iron ore, coking coal, limestone), refractories, capital equipment, power, and logistics, and forward linkages with construction, infrastructure, automotive, railways, capital goods, defence, consumer durables, and energy. Its inherent attributes, high corrosion resistance, strength, durability, low weight, and ductility, make it essential across various applications. Investments in the steel sector have a significant economic ripple effect, with each rupee spent generating 1.4 times the output value and supporting employment at 6.8 times the initial impact (Source: PIB). These strong multiplier effects highlight why accelerating investments in steel is not just an industrial goal, but a broader economic imperative as India targets 300 MTPA crude steel capacity by FY2030 Driven by rapid industrialisation and infrastructure-led growth, India’s steel production has surged in recent years, positioning the country as the second-largest steel producer globally, behind China, which accounts for over 50% of the world’s output.
The growth rate of steel production in India has outpaced both China and the global average. Between 2016 and 2024, India recorded a CAGR of ~5%, compared to 2.76% for China and 1.77% globally. Notably, while China’s steel production has been declining since 2020, India witnessed an accelerated CAGR of 8% during this period. This divergence underscores India’s rising prominence in the global steel industry, supported by abundant raw materials, cost-effective labor, and enabling government policies.
Despite growth in steel production and capacity expansion, India's per capita steel consumption remains relatively low at 93.4 kg, compared to the global average of approximately 219 kg (2023). This significant gap highlights the untapped potential in domestic consumption, which is expected to rise sharply as India accelerates investments in infrastructure, affordable housing, and manufacturing. Bridging this consumption gap will necessitate a substantial increase in steel-making capacity, reinforcing the strategic need to achieve the 300 million tonne crude steel capacity target.
India’s Mission 300 MTPA and Global Opportunity Landscape
In line with the vision of Atmanirbhar Bharat, the Government of India aims to reduce import dependency, promote domestic capacity expansion through sustainable practices, and position the country as a global steel leader. The National Steel Policy (NSP) 2017 outlines an ambitious roadmap to achieve 300 MTPA of crude steel capacity, 255 MTPA of production, 230 MTPA of finished steel consumption, and 160 kg per capita steel consumption by 2030–31.
As of FY2025, India has an installed crude steel capacity of 205 MTPA. According to the Global Energy Monitor Index (GEMI), a cumulative 352 MTPA of additional steel capacity is proposed, of which approximately 8% (28.16 MTPA) is currently under construction. This signals a strong pipeline of future capacity, aligning with India’s goal to meet rising domestic demand and capitalize on global supply chain realignments.
India’s position in the Global Steel Trade
The global adoption of the China Plus One (C+1) strategy, aimed at diversifying supply chains away from China, presents a significant opportunity for India's steel sector. India’s advantage lies in its large labour pool, supportive policy environment, and expanding infrastructure base. However, the sector currently faces competition in domestic and global markets, primarily due to China’s surplus production capacity, its softening domestic demand, and aggressive export pricing.
India’s finished steel imports from China have surged to a seven-year high, exerting downward pressure on domestic steel prices and eroding margins for Indian producers. On the export front, the European Union (EU), which accounts for over 40% of India’s finished steel exports, has implemented import quotas and imposed a 25% safeguard duty (since July 2018) on quantities exceeding the quota. These measures have led to a cumulative trade loss of USD 6.92 billion between July 2018 and March 2024, making Indian steel less price competitive.
Further compounding challenges, the EU’s proposed Carbon Border Adjustment Mechanism (CBAM), set to take effect from 2026, will levy carbon taxes on carbon-intensive imports. With India’s finished steel emitting 2.55 tonnes of CO₂ per tonne, which is 20–25% higher than China’s (as per GEMI), Indian exports risk becoming even less competitive. Reflecting this, exports to key EU destinations such as Italy, Belgium, and Spain declined by 48% in FY24, down from 3.20 MMT in the previous year.
As a result of increased low-cost imports and restrictive global trade dynamics, India became a net steel importer in FY24, a reversal after nearly a decade of being a net exporter, and continues to remain so in FY25, despite being the world’s second-largest steel producer.
Challenges and Bottlenecks
India’s ambition to achieve 300 million tonnes of steel capacity and 255 MTPA crude steel production by 2030–31 is ambitious but not without significant challenges. The key bottlenecks lie across the resource ecosystem, infrastructure readiness, policy execution, financing environment, and global trade dynamics.
Resource availability –
- Resource availability –
- Iron Ore – Abundance vs Quality: India possesses over 35 billion tonnes of iron ore reserves, ranking fifth globally (source: PIB). However, 66% of these reserves are of medium to low grade, requiring greater beneficiation efforts, especially from private players. According to the National Steel Policy, meeting 255 MTPA crude steel production will require 437 MTPA of iron ore. In FY25, the iron ore production stood at 291 MTPA, growing only 4% YoY, signalling a shortfall.
- High Dependence on Imported Coking Coal: The BF–BOF route, which contributes around 43% of India’s steel output, is heavily reliant on coking coal. This input comprises 42% of total production cost, and 85% of the coking coal requirement is met through imports (source: Ministry of Steel), increasing cost and supply chain risks.
- Scrap Shortage and Circular Economy Challenges: Steel scrap is a strategic input for sustainable steelmaking. While scrap-based production reduces CO₂ emissions and input dependency, India’s domestic scrap availability is limited (20–25 MTPA) against the 48–52 MTPA target by 2030 (NSP). With 30% of scrap currently imported, risks are rising due to export restrictions by other countries seeking to preserve their own raw material efficiency, since 1 tonne of scrap saves 1.1 tonnes of iron ore, 630 kg of coal, and 55 kg of limestone.
- Scrap Shortage and Circular Economy Challenges: Steel scrap is a strategic input for sustainable steelmaking. While scrap-based production reduces CO₂ emissions and input dependency, India’s domestic scrap availability is limited (20–25 MTPA) against the 48–52 MTPA target by 2030 (NSP). With 30% of scrap currently imported, risks are rising due to export restrictions by other countries seeking to preserve their own raw material efficiency, since 1 tonne of scrap saves 1.1 tonnes of iron ore, 630 kg of coal, and 55 kg of limestone.
- High Carbon Emissions: India’s steel sector currently exhibits relatively high CO₂ intensity, with emissions of around 2.55 tonnes per tonne of steel, estimated to be 20–25% higher than China. This is primarily due to the continued reliance on coal-based BF–BOF and DRI technologies, along with limited scrap utilisation. Though green technologies like hydrogen-based DRI and Electric Arc Furnaces (EAFs) can reduce emissions by up to 90%, they are currently costly, technologically immature, and not commercially scalable in India (EY report on Green Hydrogen in Indian Steel Sector).
- Logistics and Infrastructure Bottlenecks: India’s logistics costs remain high at 13–14% of GDP, compared to the global average of 8%, affecting steel sector competitiveness. Poor multimodal transport, congestion at ports, and inconsistent infrastructure development delay projects and raise freight costs.
- Land, Water, and Environmental Clearances: Obtaining land and environmental clearances for greenfield projects is complex, bureaucratic, and time-consuming. These delays increase project costs and discourage private investment in capacity expansion. For instance, the Bokaro Steel Plant’s 2.3 MTPA expansion (Rs. 20,000 crore investment) is hindered due to a pending water linkage from the Damodar River to replace Tenughat Canal, a delay persisting for over 5 years.
- Cost of Financing: India’s cost of finance is significantly higher than competing steel-producing nations.
- India’s 1-year MCLR (SBI): 9%
- China’s 1-year Loan Prime Rate (LPR): 3%
- Global Market Dynamics: India’s steel exports face mounting pressure from global trade headwinds. Low-priced Chinese imports, driven by overcapacity and their weak domestic demand, have surged to a seven-year high, hurting domestic prices and margins. The EU, India’s largest export destination, has imposed quotas and safeguard duties, leading to a $6.92 billion trade loss since 2018. The upcoming CBAM in 2026 will further penalize carbon-intensive steel, posing a risk due to India’s high emission intensity.
Despite these headwinds, India’s steel sector remains structurally strong and globally significant. With targeted policy support, sustainable technology adoption, infrastructure investments, and public-private partnerships, India can overcome these challenges. The road to 300 MTPA is demanding but achievable, and positions India to become a global leader in specialty and green steel, reinforcing the country’s self- reliance and climate commitments. The next section explores the key enablers and strategies required to navigate these challenges effectively.
Key Enablers for Path to - Steel 300
Achieving the 300 MTPA steel capacity target by 2030–31 requires a multi-pronged strategy encompassing private sector leadership, continued momentum in the infrastructure spending, supporting domestic demand, enabling policies, and rapid adoption of clean technologies. The following are the key enablers:
- Private sector participation: The private sector accounts for approximately 83% of India’s steel production, with the remaining share contributed by public sector undertakings such as SAIL and RINL. The industry is led by major players including JSW Steel (34 MTPA), Tata Steel (22 MTPA), and SAIL (21 MTPA), who together represent around 38% of India’s total installed steel capacity of 205 MTPA as of FY25. These companies are actively pursuing capacity expansion and green steel production, aligning with the global shift toward low-carbon steel and playing a critical role in achieving the country’s 300 MTPA capacity target by 2030–31.
- Domestic growth/consumption:
- The domestic steel demand is expected to rise significantly, driven by robust growth in infrastructure, construction, railways, and the automotive sector. This aligns with India’s broader vision of becoming a $5 trillion economy by 2029.
- Currently, over 90% of India’s finished steel production is consumed domestically, reflecting the strength of internal demand and the scale of upcoming public and private investments.
- With per capita steel consumption at 98 kg, well below the global average of ~219 kg, there is substantial headroom for growth, especially as urbanization and industrialization gather pace.
- Government initiatives such as PM Gati Shakti, PM Awas Yojana, the National Infrastructure Pipeline (NIP), and a renewed thrust on domestic manufacturing under the Make in India programme are expected to act as long-term demand catalysts across sectors like housing, transport, logistics, and energy infrastructure.
- Policy supports: The Government of India is actively enabling the growth of the steel sector by ensuring raw material security and facilitating market access for finished steel products. Several targeted policy initiatives have been launched to promote domestic capacity, sustainability, and self- reliance:
- Mission Coking Coal (2021): Aimed at reducing India’s heavy import dependence, the mission targets 140 MTPA of domestic coking coal production and seeks to increase the blending of domestic coal from 10% to 30% in steelmaking by 2030.
- Steel Scrap Recycling Policy (2019): Recognizing the need to promote circular economy practices, this policy aims to establish a formal and regulated scrap ecosystem to increase domestic scrap availability and reduce reliance on imports.
- DMI&SP Policy (Domestically Manufactured Iron & Steel Products): Designed to promote ‘Made in India’ steel for government procurement, the policy mandates 50% local value addition for capital goods and prohibits global tenders for steel contracts below Rs. 200 crore, strengthening the domestic steel industry’s self-reliance.
- Production-Linked Incentive (PLI) Scheme for Specialty Steel (2021): This flagship scheme incentivizes the domestic production of value-added steel such as coated steel, electrical steel, and alloy steel, which are critical for high-growth sectors like automotive, defence, and renewable energy. In its first phase, the scheme attracted 44 projects from 26 companies, committing an investment of Rs. 27,106 crore and creating an additional 24 MTPA of downstream capacity.
- Technology upgradation: India is actively upgrading technological capabilities in its steel sector to align with global sustainability targets, strengthen competitiveness in ESG-conscious markets, and support the country’s broader decarbonization goals. While the transition to sustainable steelmaking is still at an early stage, investments in process innovation and digital technologies across the steel value chain are expected to reach USD 2.7 billion by 2030, as per the FICCI–Deloitte Report.
- Process Transition from Coal-based to Natural Gas based: India’s Direct Reduced Iron (DRI) industry is predominantly coal-based, contributing to high carbon intensity. Natural gas-based DRI, on the other hand, emits approximately 30% less CO₂ than traditional coal gasification and rotary kiln processes. However, limited access to affordable natural gas remains a key constraint; only 21% of existing blast furnace (BF) capacity and 5% of coal- based DRI capacity are currently connected to gas pipeline networks. To address this, the Ministry of Steel is actively facilitating gas infrastructure development in key steel-producing belts and working towards long-term LNG procurement contracts to ensure supply security.
- Green hydrogen-based DRI (Direct Reduced Iron) : is emerging as a game-changing technology for low-carbon steel production. Unlike conventional DRI, which uses natural gas or coal, releasing CO₂ in the process, green hydrogen reduces iron ore while emitting only water vapor, offering a near-zero-emission pathway.
- Potential to reduce carbon emissions by up to 90%.
- Hydrogen injection can cut coke consumption and CO₂ emissions by ~190 kg/tcs in blast furnaces and ~340 kg/tcs in shaft furnaces, as indicated in graph below (Source: Ministry of steel).
- Long-term potential for cost-effective production, especially as green hydrogen prices decline.
- With carbon-adjusted trade regimes emerging, firms like JSW Steel and Tata Steel are already scaling up their green capacity. These shifts are not just about compliance; they open up access to premium global markets and align with India’s net-zero ambitions.
- The National Green Hydrogen Mission: To support early adoption, the Ministry of Steel has initiated 7 pilot projects under the National Green Hydrogen Mission aimed at evaluating hydrogen use in steelmaking processes. The government has sanctioned Rs. 19,744 crore in funding to produce 5 MTPA of green hydrogen by 2030. Currently, about three pilot projects on hydrogen-based DRI, including a major 3,200 TPD facility by SAIL and smaller pilots by Matrix Gas and Simplex Castings.
In addition to green hydrogen and gas-based transitions, the government is exploring medium-term decarbonization levers to further reduce emissions in the steel sector:
- Carbon Capture and Storage (CC&S) This technology involves capturing CO₂ emissions from steelmaking processes, especially from blast furnaces, and either storing them underground or utilizing them in other industrial applications. CC&S holds promise in significantly lowering the carbon footprint of conventional steel production, especially in integrated plants..
- Biochar as an Alternative Fuel: Biochar, derived from biomass, is being evaluated as a sustainable substitute for coal in iron and steel manufacturing. It offers a lower-emission alternative and aligns with circular economy goals by utilizing agricultural waste as input.
While both technologies are in early stages of exploration and deployment, they are part of the government’s medium-term strategy for decarbonizing one of the most carbon-intensive industries in India.
Opportunities in Specialty Steel – Moving Up the Value Chain
India continues to depend on imports for high-grade specialty steel used in the automotive, defence, and power sectors. In FY2020–21, domestic production stood at just 18 MTPA, while imports touched ~4 MTPA, resulting in foreign exchange outflows of nearly ₹30,000 crore (Source: PIB).
To bridge this gap, the Production Linked Incentive (PLI) scheme for Specialty Steel, with an outlay of ₹6,322 crore over 2023–28, aims to:
- Add 25 MTPA of value-added steel capacity
- Attract ₹40,000 crore in investments
- Create over 5 lakh jobs, including 68,000 direct jobs
This policy-led transition toward value-added steel is expected to enhance profitability and reduce import dependency, while boosting India’s export competitiveness in high-end steel markets.
Conclusion and Way Forward
India’s steel sector stands at a defining inflection point. The journey toward achieving 300 MTPA of crude steel capacity by 2030–31 is both ambitious and essential to meet rising domestic demand, reduce import dependency, and strengthen India’s position in the global supply chain. Despite formidable challenges, from raw material constraints, high logistics and finance costs, and global trade frictions to decarbonization imperatives, India possesses the strategic intent, policy backing, and industrial capability to realise this vision.
The evolving trade landscape presents a dual reality for India, while global opportunities are expanding, they are increasingly shaped by sustainability-driven trade barriers such as the Carbon Border Adjustment Mechanism (CBAM). To reposition India as a dominant force in global steel trade, proactive policy support must be coupled with a focus on green steel, enhanced export competitiveness, and strategic trade safeguards to protect domestic producers. This will also require a greater emphasis on value-added and specialty steels, a shift from coal-based to gas-based DRI for cleaner production, and a concerted effort to lower the overall cost of steel manufacturing.
The sector’s future growth will hinge on five critical levers:
- Accelerated Investments in value-added and green steel production to ensure global competitiveness and regulatory compliance.
- Strengthened Infrastructure & Raw Material Linkages, including multimodal logistics, domestic coking coal development, and a robust steel scrap ecosystem.
- Focused Technology Transition, especially toward gas-based and hydrogen-based DRI, broader EAF usage, and integration of CCUS and biochar.
- Enabling Policy Ecosystem, with streamlined clearances, interest subvention for green investments, and stable export incentives.
- Collaborative Public–Private Execution, with industry, government, and academia co-creating scalable and sustainable solutions.