New Delhi: India’s steel sector, though aligned with the government’s ambitious target of reaching 300 million tonnes per annum (MTPA) of crude steel capacity by 2030–31, is grappling with serious structural challenges, a financial consultancy firm said on Thursday. These include the need for widespread iron ore beneficiation, an 85 percent dependency on imported coking coal, limited domestic availability of steel scrap, and high carbon dioxide emission intensity in steelmaking — all of which could impede the sector’s growth trajectory.
“As of 2024–25, India has achieved an installed capacity of 205 MTPA, followed by proposed capacity expansion plans of 167 MTPA till 2031 by major steel players,” said MP Financial Advisory Services LLP (MPFASL) in a statement. “However, the sector faces several challenges, including the need for iron ore beneficiation, an 85 percent dependency on imported coking coal, limited availability of steel scrap, and high CO₂ emission intensity in the steelmaking process.”
India’s steel industry, described by the firm as the backbone of the nation’s infrastructure and manufacturing ecosystem, is also under pressure from global trade dynamics. These include low-cost steel imports from China, safeguard duties imposed by the European Union, and the looming threat of carbon border adjustment tariffs. MPFASL said, “High logistics costs accompanied by the time-consuming process for obtaining approvals for green field projects and a higher cost of financing when compared to China, the largest steel producer, further pose challenges towards the desired steel capacities,” said the report.
Despite these challenges, MPFASL said the 300 MTPA steel capacity target would be achieved through a multi-pronged strategy, dependent on five critical levers: 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.
“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 dollar economy vision,” said Mahendra Patil, Founder and Managing Partner at MP Financial Advisory Services LLP.
