New Delhi: India, currently the second-largest steel producer in the world after China, is planning a significant increase in capital expenditure (Capex) in the steel sector for the financial year 2026-27. While the country produces around 205 million tonnes of steel annually, it still lags behind countries like Japan and South Korea in specialized steel production.
Government-owned steel companies are set to play a key role in bridging this gap. According to Budget 2026 documents presented by Finance Minister Nirmala Sitharaman in Parliament, public sector steel companies are expected to significantly increase their investment in machinery, plants, and infrastructure. The total Capex for FY 2026-27 is projected to rise by approximately 44% to ₹25,125 crore, which is also expected to boost employment opportunities in the sector.
SAIL and NMDC Lead the Charge
Among the leading investors are Maharatna PSUs Steel Authority of India Limited (SAIL) and National Mineral Development Corporation (NMDC), whose Capex is expected to rise by up to 50%. These companies will fund the expansion through internal resources and Extra Budgetary Resources (IEBR).
- SAIL: Capex expected to reach ₹15,000 crore, up from ₹10,000 crore in FY 2025-26.
- NMDC: Capex to increase from ₹6,000 crore to ₹9,000 crore.
- MOIL (Manganese Ore India Limited): Capex set to rise from ₹600 crore to ₹800 crore.
India’s Position in Global Steel Production
India is currently the world’s second-largest steel producer, producing approximately 205 MTPA annually, while China leads with over 1,200 MTPA. Under the National Steel Policy (NSP) 2017, India aims to achieve a production capacity of 300 MTPA by 2030-31. Experts estimate that this will require an investment of $45-50 billion between 2023 and 2031, creating an additional 80-85 MTPA of capacity.
Current Industry Scenario and Outlook
Globally, steel companies are experiencing a minor slowdown. However, analysts believe that steel prices in India are likely to rise. Nomura, in a recent report, stated that the recent decline in steel consumption is seasonal rather than structural. Demand is expected to pick up again by FY 2027-28, driven by growth in the automotive sector, infrastructure expansion, manufacturing, and other key industries.
Move Towards Green Steel
Globally, steelmakers are increasingly focusing on “green steel,” produced with minimal environmental impact. According to ICRA Ratings, the share of green steel in India’s total demand is expected to grow from around 2% (4 MTPA) in 2030 to 10% (30 MTPA) by 2040 and reach 40% (150 MTPA) by 2050. Public sector steel companies are taking proactive steps to promote this sustainable production method.
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