India’s steel industry enters the new fiscal on a strong footing, with demand visibility remaining robust despite global volatility and cost pressures. Backed by sustained infrastructure spending, urbanisation, and policy support, the sector is expected to maintain its growth trajectory, even as it navigates challenges around energy security and input costs.
This positive outlook follows a solid performance in FY 2025–26, where the industry reinforced its position as the world’s second-largest steel producer while adapting to shifting global trade dynamics.
FY26 performance reflects strong domestic fundamentals
The financial year 2026 marked a period of steady expansion for the Indian steel sector, driven largely by domestic demand resilience. Crude steel production rose by over 10.7% year-on-year to approximately 168.4 million tonnes, underlining sustained industrial momentum.
Consumption remained equally strong, with finished steel demand growing by around 7–8% to 164 million tonnes. The continued push in infrastructure, construction, railways, and manufacturing played a central role in supporting this demand cycle, reinforcing the sector’s linkage with India’s broader economic growth.
Export revival strengthens global positioning
A key highlight of the fiscal was India’s resurgence in global steel trade. Finished steel exports surged by 35.9% to about 6.6 million tonnes, while imports declined sharply by 31.7%. This shift enabled India to regain its status as a net exporter.
Improved competitiveness, along with diversification into markets such as the West Asia, Europe, and Southeast Asia, strengthened India’s global footprint and provided an additional growth lever beyond domestic consumption.
Capacity expansion signals long-term confidence
Investment momentum remained strong across the sector, reflecting confidence in long-term demand prospects. India’s total steelmaking capacity reached around 220 million tonnes during FY26 and is projected to scale up to 300 million tonnes by 2030.
Leading players continued to invest in capacity expansion, technological upgrades, and value-added products, aligning with evolving market requirements and the shift towards higher efficiency and sustainability.
Margins under pressure despite price recovery
While steel prices showed signs of recovery in early 2026 after a prolonged soft phase, profitability remained under strain. Volatility in raw material costs, particularly coking coal, coupled with rising logistics and freight expenses, weighed on margins.
Global price fluctuations and geopolitical disruptions further added to cost uncertainties, limiting the extent of margin recovery for producers.
Energy and supply risks emerge as key challenges
The fiscal also highlighted emerging vulnerabilities linked to energy security and supply chain disruptions. Gas supply constraints from the West Asia led to shortages of industrial fuels such as LPG, posing risks to production continuity.
Government intervention, including increased LPG allocations to critical sectors like steel, helped mitigate the immediate impact. However, the episode underlined the sector’s exposure to external shocks and the need for diversified energy strategies.