India’s Steel Sector: Status, Growth Drivers & Challenges

Table of contents

Steel has been a cornerstone of industrialisation, driving economic growth and infrastructure development. In the early 20th century, industrialising nations leveraged strong steel industries to fuel manufacturing. Building a robust steel sector is crucial for India to become a global economic leader.

India’s Steel Sector: Current Status

Economic Contribution: Contributing approximately 2% to India’s GDP annually.
Employment Contribution: The steel sector provides direct jobs to 6 lakh people and indirect employment to 20 lakh people.
Trade Performance: In 2023–24, India exported approximately 9 million tonnes of steel and imported nearly 7 million tonnes.
Steel Consumption Analysis: Per capita steel consumption is approximately 86 kg, while the global average is around 230 kg.
National Steel Policy 2017 Targets: The policy aims for 300 MTPA crude steel capacity, 255 MTPA production, and 160 kg per capita consumption by 2030.
Global Production Rank: India is the 2^nd largest global steel producer, with FY23 output of 125.32 million tonnes (MT) of crude steel and 121.29 MT of finished steel.

Key Growth Drivers of India’s Steel Sector

Infrastructure Push: Mega projects like PM Gati Shakti, Bharatmala, and Smart Cities are driving robust growth in domestic steel demand.
Sectoral Linkages: Serves as the fundamental backbone for key sectors such as construction, defense, railways, automobiles, energy, and capital goods.
Technology Leap: Accelerated adoption of Industry 4.0, artificial intelligence, automation, and green hydrogen fosters cleaner, more efficient production.
PLI for Speciality Steel: ₹6,322 crore incentive over five years to enhance domestic manufacturing of high-quality, value-added steel products.
Green Transition Momentum: To reduce the emissions footprint, concentrate on green hydrogen, electric arc furnaces, carbon capture technologies, and scrap recycling.

Challenges in India’s Steel Sector

Raw Material Vulnerability: Approximately 85% of coking coal is imported annually, leading to significant cost volatility.
High Emission Burden: The sector accounts for approximately 12% of industrial CO₂ emissions, and greening it requires significant capital investment.
Logistics Inefficiencies: High logistics cost (~12–14%) due to inadequate multimodal infrastructure and rail connectivity.
Speciality Steel Imports: Annually, 6–7 MT is imported due to the limited domestic capacity for advanced steel.
Outdated Technology: Dependence on traditional blast furnaces hinders efficiency and environmental compliance.

Government Initiatives to Strengthen India’s Steel Sector

National Steel Policy (NSP) 2017: Aim for 300 MTPA steel capacity and 160 kg per capita consumption by 2030–31, promoting self-sufficiency and competitiveness.
Production Linked Incentive (PLI) Scheme for Speciality Steel: A ₹6,322 crore scheme over 5 years to boost speciality steel production through investments and innovation.
Green Steel Initiatives: Decarbonisation task forces, hydrogen pilots, and adoption of Best Available Technologies.
Steel Scrap Recycling Policy (2019): Promotes circular economy and reduces dependence on imported scrap.
Industry 4.0 and Digital Integration: Encourages automation, intelligent analytics, and advanced digital manufacturing.
Steel Research and Technology Mission of India (SRTMI): A public-private partnership to advance R&D for cost-effective technologies and enhance steel quality.
Integration with PM Gati Shakti National Master Plan: Maps steel units to improve planning for enhanced connectivity via rail, roads, ports, and pipelines.

Way Forward

Diversify Raw Material Sources: Reduce coking coal dependency through new global imports, domestic mining, and advanced coal gasification technologies.
Accelerate Green Steel Transition: Scale up green hydrogen, EAFs, and carbon capture technologies with R&D support, subsidies, and fast-tracked implementation of policies.
Upgrade Infrastructure & Logistics: Expand multimodal transport networks; enhance last-mile rail and port connectivity under the PM Gati Shakti initiative for smoother steel distribution.
Expand Specialty Steel Capacity: Fast-track PLI Scheme to enhance domestic production of strategic, high-grade steel for critical sectors like defence and aerospace.
Promote Smart Manufacturing: Incentivise the adoption of AI, IoT, and energy-efficient production systems to boost productivity, reduce emissions, and enhance global competitiveness.
Empower MSMEs in Value Chain: Ensure access to affordable credit, skill development, and improved market access for MSMEs in steel manufacturing and recycling sectors.
Boost Export Competitiveness: Streamline trade facilitation processes, improve steel quality standards, and explore FTAs to expand export markets and increase global share.

India’s steel sector is evolving as a global industrial pillar, fuelling GDP, job creation, and infrastructure growth. The sector can anchor India’s $5 trillion economy vision and green industrial leadership with targeted reforms, tech-led transformation, and sustainable practices.

Reference: Business Standard

PMF IAS Pathfinder for Mains – Question 176

Q. India is the second-largest steel producer globally, yet achieving Atmanirbhar status in the sector remains a challenge. Analyse the key obstacles and discuss the policy initiatives needed to transform the steel industry. (150 Words) (10 Marks)

Approach

Introduction: Briefly mention India’s global rank and current steel output levels.
Body: Concisely analyse key challenges—raw material imports, tech gaps, carbon footprint—and highlight major policy initiatives.
Conclusion: In conclusion, suggest focused reforms—infra upgrades, tech adoption, green steel, and public-private synergy for self-reliance.