Shaping the Future of Steel: India's Expansion and Growth Strategy

As India's economy continues to grow, so does its demand for steel-a cornerstone for the country's infrastructure and industrial sectors. By 2030, steel demand in India is projected to reach unprecedented levels, creating both opportunities and challenges for the industry. Let's explore how India plans to meet this rising demand and the strategies driving its expansion.

1. Expanding Indian Steel Industry Outpacing GDP Growth

India's steel demand has shown remarkable resilience, particularly since FY'21, as it outpaced GDP growth in response to an aggressive push in infrastructure development. The steel industry, contributing around 2% to India's GDP, recorded a 14-15% year-on-year increase in demand in FY'24. This growth stems largely from the government's extensive infrastructure projects, valued at over INR 11 lakh crore, aimed at boosting the transportation, housing, and energy sectors.

Historically, steel demand in India followed economic cycles closely, but in recent years, it has grown independently of GDP due to increased public investment in infrastructure and manufacturing.

Despite the pandemic-induced slowdown, India quickly rebounded, with demand reflecting the country's need for robust construction materials in public projects. Notably, the World Bank and IMF forecast sustained GDP growth at over 6.8% for FY'25, providing a stable foundation for steel consumption in the years ahead.

2. India's Domestic Steel Production: Buoyant Outlook

As the world's second-largest steel producer, India reached the milestone of 144 million tonnes (mnt) of crude steel production in FY'24, marking a 28% growth since FY'19. BigMint projects that India will achieve 210 MT of crude steel production by 2030, a substantial 47% increase over current levels.

Production remains concentrated in states like Odisha, Jharkhand, and Chhattisgarh, which collectively contribute over half of India's crude steel output. This regional production alignment not only boosts local economies but also fortifies India's position as a self-reliant steel producer.

3. Evolving Sectoral Demand Dynamics: Meeting Future Needs

India's steel demand is anticipated to grow at a 7% compound annual growth rate (CAGR), primarily driven by the construction and infrastructure sectors, which are expected to account for around 60-63% of total demand by 2030. The automobile manufacturing and engineering sectors will also significantly contribute, comprising approximately 23% of consumption.

Demand for long steel products, crucial for infrastructure projects, is expected to rise from 76 mnt currently to about 114 mnt by FY'30. Flat steel products, widely used in the automotive and capital goods sectors, are projected to increase from 63 mnt in FY'24 to 78 mnt by FY'30. By 2030, India's per capita steel consumption is expected to nearly double to close to 160 kg, compared to over 97 kg today.

Government initiatives such as Bharatmala, Sagarmala, and the Pradhan Mantri Awas Yojana (PMAY), along with major investments in railways, ports, airports, and metro projects, are fuelling steel demand. Additionally, the Production Linked Incentive (PLI) scheme in sectors like renewables and electronics is expected to bolster industrial growth and, consequently, steel consumption.

4. Future Steel Capacities: Expansion & Sustainability

To meet projected demand, India's steel capacity is expected to reach 240-250 mnt by 2030, nearing the government's ambitious target of 300 mnt. Eastern India, especially Odisha and Chhattisgarh, will remain the country's key steel-producing hubs, driven by both public and private investments.

India's production route mix is also evolving. Currently, the Blast Furnace-Basic Oxygen Furnace (BF-BOF) and Electric Arc Furnace/Induction Furnace (EAF/IF) methods contribute approximately 46% and 54%, respectively. By 2030, this ratio is projected to shift toward a 56% contribution from BF-BOF, reflecting new investments in large-scale, efficient production facilities. This expansion will add approximately 80 mnt of steel production capacity by 2030, of which 56% will be from the BF-BOF route.

Conclusion

India's steel industry is on the cusp of substantial transformation. With strong economic growth, ambitious government-led infrastructure projects, and targeted investments in advanced production methods, India is well-positioned to become a global leader in steel production and consumption. As the sector scales up, the focus will remain on sustainability, investments in cleaner production technologies, and enhancing regional capabilities to meet the needs of a rapidly expanding economy. Through these strategies, India is set to shape the global future of steel, driving economic progress and creating a resilient foundation for its industrial ambitions.