India Will Nearly Triple Its Steel Capacity. It Will Also Triple Its Coking Coal Imports. The Ministry of Steel’s draft National Steel Policy – Vision 2047 (1 October 2026) is, on its face, a growth document. Crude steel capacity goes from 220 MTPA to 604 MT by 2047; finished steel demand from 164 MT to 505 MT; per capita consumption from 116 kg — against a global average of 209 kg — to 302 kg. India’s share of global crude steel output has already risen from 5.2% in 2014 to about 8.9% in 2025.
Those are the numbers that will be quoted. They are also the least interesting in the document. Raw materials are 65–70% of steelmaking cost, and the policy’s own annexures project exactly what happens to each input..
The raw material table:
| Input | FY2025-26 | 2047 | Multiple | Import position |
| Iron ore | 299 MT | 772 MT | 2.6x | Self-sufficient |
| Coking coal | 72 MT | 236 MT | 3.3x | ~92% imported (Australia, USA, Russia) |
| Non-coking coal (PCI) | 17 MT | 48 MT | 2.8x | Largely imported (Russia, Australia) |
| Limestone & dolomite | 34 MT | 128 MT | 3.8x | ~68% imported (UAE, Oman, Bhutan) |
| Manganese ore | 11 MT | 34 MT | 3.1x | ~64% imported |
| Ferrous scrap | 36 MT | 123 MT | 3.4x | 22% imported |
India is self-sufficient in the one input it need not worry about. Everything else scales three-fold or more off a largely imported base.
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Three embedded assumptions deserve scrutiny before 604 MT is taken at face value. It assumes 88% capacity utilisation; India currently runs 170 MT from 220 MTPA, or about 77%. Hold utilisation flat and the requirement rises toward 690 MT. It further assumes 95% crude-to-finished conversion and 7% GDP growth sustained for two decades. The policy also concedes, that steel consumption flattens once per capita GDP reaches roughly USD 10,000 — which India is expected to hit between 2040-41 and 2042-43. The demand curve has a plateau date written into it.
The most important point is way in which steel would be manufactured: BOF 55%, EAF 30%, IF 15% by 2047. Today the split is roughly BOF 43%, EAF 19%, IF 38%.
The induction furnace route — the backbone of India’s secondary sector — shrinks from 38% of output to 15%. That sector holds 2,550 units and ~47% of crude steel capacity, including 100% of induction furnace units, 97% of sponge iron units and 95% of wire drawing units, with MSMEs running over 70% of IF, re-rolling, pipe and wire-drawing establishments. The policy describes these units as operating with “ageing and relatively inefficient technologies, constrained financial resources, and limited access to modern equipment and clean technologies.”
Nearly half of India’s capacity therefore sits in the segment least equipped to fund a transition, on the route the policy plans to more than halve.
Value accrues to large integrated producers able to absorb the new tech capex.
The decarbonisation arithmetic is back-loaded, and the policy is candid about it. Emission intensity falls from 2.54 tCO₂/tcs — against a global average of 1.92 — to 1.54 by 2047, across four phases: energy efficiency and renewables (2026–2030), Best Available Technologies and coal gasification (2030–2035), green hydrogen-based DRI and CCUS (2035–2040), and CCUS for residual emissions (2040–2047). The two phases carrying the heaviest abatement load depend on technologies that are not commercial today. Meanwhile the coal-intensive BOF share rises, and scrap stays at 21% of crude steel production — more tonnes, same share.
The washery statistic is the one to remember. India has roughly 39 MTPA of coking coal washing capacity; actual operational output is about 6 MT against a feed of ~17 MT, constrained by 30–40% yields and idle capacity. Every commitment to cut coking coal import dependence runs through assets operating at a fraction of nameplate.
One genuine inflection. India turned net exporter of finished steel in FY2025-26 — imports down ~32% to 6.5 MT, exports up ~36% to 6.6 MT. The target is 45 MT by 2047, roughly seven-fold. But over 60% of imports arrive from FTA partners, limiting remedial options, while export growth into developed markets requires CBAM compliance — the capability the transition schedule defers past 2035.
What to Watch Out For
- With raw materials at 65–70% of cost and the import-exposed share of that basket tripling, steel margins over two decades are a function of coking coal, limestone, dolomite and manganese sourcing — not domestic demand. Producers with captive iron ore are protected on the one input that was never the problem.
- Washery utilisation. Against ~39 MTPA installed and ~6 MT actual output, movement here is the first hard evidence that import-substitution intent is converting into tonnes. Washery capex, coal gasification projects and overseas asset acquisitions are the line items.
- CCTS and RCO compliance costs arrive well before the route-mix shift completes.
- Green H₂-DRI and CCUS from 2035 carry the bulk of the abatement burden. Until the National Green Hydrogen Mission and CCUS Mission produce bankable project economics, capex committed in the 2026–2035 window is conventional, coal-linked and exposed to a carbon cost curve on 25-to-40-year assets. Treat announced green steel capacity as optionality, not earnings.
Sources: Ministry of Steel, Government of India (2026). National Steel Policy – Vision 2047 (Draft). Dated 1 October 2026. Chapters 1–12 and Annexures II-A and II-B.
This note analyses a draft policy document for information purposes only. Draft provisions may change before notification. It is not investment advice and is not a recommendation to buy or sell any security.