KEY NUMBERS
- New Global Coal-Based Steel Capacity Announced/Under Construction: 300+ million tonnes per annum
- Annual Growth in Blast Furnace Capacity Pipeline: +5% YoY
- India’s Share in New Blast Furnace Projects: ~60%
- India’s Steel Production Target: 400 million tonnes by 2035
- Share of Coal-Based Route in Planned Indian Capacity: ~64%
- Global Steel Sector Share in CO₂ Emissions: ~11%
MARKET ANALYSIS
India is increasingly becoming the central force behind the global expansion of coal-based steelmaking capacity, reflecting the country’s aggressive push to scale industrial growth, infrastructure development, and manufacturing capability over the coming decade. According to recent global industry assessments, more than 300 million tonnes of new blast furnace steelmaking capacity using coking coal has either been announced or is currently under construction worldwide, marking a 5% increase over the past year. A substantial portion of this expansion is being driven by India’s long-term ambition to become one of the world’s largest steel-producing nations.
India’s steel industry is currently undergoing one of the most ambitious expansion phases globally. The country has set a long-term target to increase crude steel capacity to nearly 400 million tonnes by 2035, supported by rising infrastructure spending, manufacturing growth, urbanisation, railway projects, renewable energy expansion, and industrial development. Government data and industry reports continue to indicate strong momentum in steel production and consumption, reinforcing confidence among domestic steelmakers to aggressively expand capacity.
Despite growing global focus on green steel and decarbonisation, India’s expansion strategy remains heavily dependent on coal-based blast furnace technology. Reports suggest that nearly 64% of India’s upcoming steelmaking capacity is linked to coal-intensive blast furnace routes, while India alone accounts for around 60% of newly planned blast furnace projects globally. The reason behind this preference is largely economic and structural. Blast furnace-based steelmaking remains commercially viable for large-scale integrated steel plants, particularly in a rapidly growing economy where steel demand visibility remains strong.
Another major factor influencing India’s coal-based expansion is the availability of iron ore and the current limitations surrounding large-scale green steel alternatives. Technologies such as hydrogen-based steelmaking, direct electrolysis, and fully scrap-based production are still expensive, infrastructure-intensive, and commercially limited in scale. While electric arc furnace (EAF) capacity is gradually expanding globally, India continues to face challenges related to scrap availability, gas infrastructure, and the economics of low-carbon steelmaking. As a result, traditional blast furnace routes continue to dominate near-term expansion plans.
India’s steel demand fundamentals remain one of the strongest globally, which is encouraging steelmakers to prioritise capacity creation despite environmental concerns. Domestic steel consumption has continued rising steadily over recent years, supported by public infrastructure investments, housing demand, automotive manufacturing, industrial expansion, and capital expenditure cycles. Recent industry estimates indicate that India’s steel demand could continue growing around 9% annually over the near term, making it one of the fastest-growing steel markets in the world.
However, the rapid expansion of coal-based steelmaking also raises significant concerns around carbon emissions and long-term sustainability. Steel production is among the most carbon-intensive industrial activities globally, accounting for nearly 11% of global CO₂ emissions and approximately 8% of total greenhouse gas emissions worldwide. India’s steel industry emissions intensity is already estimated to be significantly above the global average, largely due to heavy dependence on coal-based production methods and imported coking coal.
The expansion also has important implications for global coking coal markets. India already imports nearly 90% of its metallurgical coal requirements, and future blast furnace expansion is expected to substantially increase raw material demand. Industry estimates suggest India’s coking coal requirement could rise sharply over the coming years as steel capacity expands toward national policy targets. This is likely to strengthen trade flows with coal-exporting countries such as Australia, the United States, Canada, and Russia.
At the same time, India is also attempting to balance industrial growth with climate commitments. Draft policy discussions indicate that the country aims to reduce emissions intensity from steelmaking by nearly 25% by 2035-36 while simultaneously doubling steel output. The government has started promoting green steel roadmaps, scrap utilisation, gas-based steelmaking, CCUS technologies, and energy efficiency improvements. However, the transition toward lower-emission steelmaking is expected to be gradual rather than immediate.
INDUSTRY IMPACT
India’s aggressive steel capacity expansion is likely to reshape global raw material trade flows over the coming decade. Rising demand for coking coal, iron ore, ferro alloys, and steelmaking inputs could significantly influence international commodity pricing dynamics and supply-chain investments. Exporting nations supplying metallurgical coal and raw materials may increasingly view India as one of the most important long-term demand centres globally.
The expansion also creates substantial opportunities for mining companies, logistics providers, equipment manufacturers, engineering firms, and downstream steel processors. As integrated steel plants continue scaling operations, investments across ports, railways, slurry pipelines, beneficiation facilities, and captive power infrastructure are also expected to increase significantly. This could create broader industrial multiplier effects across India’s manufacturing ecosystem.
At the same time, environmental and policy pressures surrounding emissions reduction are likely to intensify. Global buyers, particularly in Europe and developed markets, are increasingly implementing carbon-linked trade mechanisms such as CBAM (Carbon Border Adjustment Mechanism), which may eventually impact export competitiveness for carbon-intensive steel producers. Indian steelmakers may therefore face growing pressure to gradually integrate cleaner technologies alongside capacity expansion.
WHAT TO WATCH NEXT
One of the most critical areas to monitor will be how quickly India scales alternative low-carbon steelmaking technologies while continuing its capacity expansion journey. Investments in electric arc furnaces, scrap recycling ecosystems, gas-based DRI production, hydrogen pilot projects, and renewable energy integration will play an increasingly important role in shaping the future structure of India’s steel industry. The pace of adoption for these technologies could determine how successfully India balances growth with sustainability.
Another important factor will be the trajectory of coking coal imports and global raw material dependency. Since India remains heavily reliant on imported metallurgical coal, any volatility in international coal prices, freight rates, or geopolitical trade disruptions could directly impact steel production economics. Steelmakers may increasingly focus on raw material security strategies, overseas asset acquisitions, and long-term supply agreements to reduce supply-chain risks.
Market participants will also closely watch the evolution of global climate regulations and carbon-linked trade barriers. Mechanisms such as the European Union’s CBAM could gradually influence export competitiveness for steel produced through carbon-intensive methods. This may encourage Indian steelmakers to accelerate investments in emissions reduction technologies, energy efficiency, and green steel initiatives over the medium term.
Finally, infrastructure growth and domestic steel demand trends within India will remain the strongest long-term driver for capacity expansion. Continued government spending on transportation, urban development, renewable energy, defence manufacturing, and industrial corridors could sustain robust steel consumption growth for years ahead. As long as domestic demand visibility remains strong, steelmakers are likely to continue prioritising scale expansion despite rising decarbonisation pressures.
MARKET OUTLOOK
India is rapidly positioning itself as the primary growth engine for the global steel industry, driven by strong domestic consumption, industrial expansion, and infrastructure-led economic growth. The country’s ambitious steel capacity targets indicate that demand for raw materials and steelmaking infrastructure will likely remain structurally strong over the next decade. This creates significant long-term opportunities across mining, logistics, ferro alloys, engineering, and downstream manufacturing sectors.
However, the growth trajectory is also expected to intensify the debate between industrial expansion and environmental sustainability. While coal-based blast furnace steelmaking remains commercially dominant today, long-term competitiveness may increasingly depend on how effectively steelmakers adapt to global decarbonisation trends and carbon-conscious trade policies. The transition toward greener steel production is likely to be gradual, but it is becoming strategically unavoidable.
Over the coming years, India may ultimately emerge as both the world’s largest steel growth market and one of the most important battlegrounds for the future direction of global steelmaking technology. The balance it strikes between scale, cost competitiveness, energy security, and emissions reduction could significantly influence the evolution of the global steel industry itself.