Indian steelmakers are set to enter a multi-year investment cycle as the country targets expanding its steel-making capacity to 300 million tonnes by 2030, according to a report by S&P Global. The country’s top four listed steel producers have announced a 40 per cent year-on-year increase in aggregate capital expenditure (capex) for fiscal 2027 (ending March 31), representing an investment of Rs 70,000 crore, up from Rs 50,000 crore in fiscal 2026.
Capacity expansion targets
"This is the start of a multi-year capex cycle as India aims to increase steel capacity to 300 million tonnes by 2030. The top four account for half of the country’s steel output," the S&P Global report said. India currently has a total steel capacity of 220 million tonnes, implying a required addition of 80 million tonnes over the next five years. The report estimates that achieving this target would entail an annual capital outlay of about USD 15 billion over the period.
| Metric | Fiscal 2026 | Fiscal 2027 (Target) | Change |
|---|---|---|---|
| Aggregate capex (top four producers) | Rs 50,000 crore | Rs 70,000 crore | +40% YoY |
| Finished steel consumption | 165 million tonnes | Expected >215 million tonnes by 2031 | +>50 million tonnes in 5 years |
| Total steel capacity | 220 million tonnes | 300 million tonnes by 2030 | +80 million tonnes |
Policy support and trade protection
The investment push is being driven by strong domestic demand. India’s finished steel consumption stood at 165 million tonnes in fiscal 2026, and S&P Global expects annual steel consumption to increase by more than 50 million tonnes over the next five years.
The capacity expansion is also being supported by trade protection measures. "The capacity addition comes at a time when the local producers face reduced competition from low-priced overseas supply, as safeguard duties continue to curb cheaper imports," it said. Introduced provisionally in April 2025, the 11 per cent -12 per cent duties on steel imports were extended through April 2028 in early 2026, according to the report.
Earnings and risk outlook
According to S&P Global, sector-wide earnings are rising in the Indian steel industry, supported by firm domestic steel prices and healthy demand. Stressing on the geopolitical conflict, the report noted, "While in the Middle East introduces second-order effects, primarily through higher freight and elevated energy costs, resilient steel prices should offset the impact on profit margins."
However, Indian steel companies are "well-positioned to absorb heavy capital outlays," and "capital investments will likely stay elevated beyond fiscal 2027," as per S&P Global.
"Given the significant capacity additions, any prolonged weakness in domestic demand would be a key risk. The resulting overcapacity could put pressure on steel prices and earnings."
— S&P Global report
The report highlights that while the expansion plans are ambitious, they hinge on sustained demand growth. Any slowdown in India's domestic steel consumption could lead to overcapacity, undermining the very price and margin assumptions that justify the heavy capex. For commodity traders and analysts, monitoring domestic demand indicators and import duty developments will be critical to assessing the risk of a supply-demand imbalance in the Indian steel market.
Sources:
