Increasing Steel Production by India Despite Tariff Worries from the US
The Indian government is taking significant steps to bolster the steel sector and make it self-reliant. The budget for the Production-Linked Incentive (PLI) scheme in speciality steel has seen a sixfold increase, from Rs 55 crore in FY25 to Rs 305 crore in the FY26 budget estimate.
The steel sector in India faces several challenges, including plant efficiency, the adoption of artificial intelligence and machine learning, digitisation, and decarbonisation. To address these issues, the government is considering measures such as promoting innovative technologies, introducing more PLI schemes, duty cuts, increasing consumption demand, and offering a wide range of steel products.
One of the key policy measures implemented by the government is the revised Domestically Manufactured Iron & Steel Products (DMI&SP) Policy. Notified in May 2025 and amended in July 2025, this policy mandates government ministries and departments to prefer procurement of iron and steel products entirely manufactured in India. It also relaxes entry barriers for indigenous technology suppliers to participate in steel mill commissioning tenders.
The government is also focusing on local content requirements and easing participation rules for Indian companies in steel mill projects. This is aimed at building an ecosystem for self-reliant steel production.
In addition, the government aims to achieve a crude steel production capacity of 300 million tonnes by 2030-31. Regulatory clarifications to level the playing field between domestic and foreign manufacturers and measures to promote steel sector expansion are initiatives to support this goal.
To sustain export competitiveness, the government is incentivizing low-carbon steel production. Under the PLI scheme, "green steel" producers with emissions below 2.2 tonnes CO₂ per tonne steel receive benefits.
The government is also investing heavily in infrastructure sectors such as roads, railways, metros, industrial corridors, and affordable housing, which drives domestic steel demand and encourages the growth of steel manufacturing capacity.
Financial support and incentives, such as budget allocations to the Ministry of Steel and initiatives like the PLI scheme for specialty steel, are directing significant investments towards the sector, further boosting indigenous production capabilities.
In summary, the government's policy framework blends procurement preferences for domestically made steel, incentives for green and specialty steel production, financial investments, and infrastructure-driven demand growth to promote a self-reliant and globally competitive Indian steel sector.
India, the world's second-largest steel producer, has major players including Tata Steel, JSW Steel, and Steel Authority of India Limited (SAIL). The government has launched the Steel Research Technology Mission of India (SRTMI), a joint initiative of the Indian steel industry and academia, to promote growth in the sector by identifying and solving critical sector challenges, supporting open research proposals, and helping early-stage start-ups develop cutting-edge steel technologies.
From April 2024 to January 2025, India's engineering exports to the US rose by 9% annually, reaching $15.6 billion. However, the US has imposed tariffs of 25% on steel and aluminium imports, effective from March 12, which has raised concerns among Indian exporters about declining orders and rising costs.
Sandeep Poundrik, secretary of the ministry of steel, has projected per capita steel consumption in India to rise from 100 kg to 158 kg before 2030. Indian steel companies export products to over 100 countries.
The government has emphasized the importance of the manufacturing sector in the steel industry and its push for making India self-reliant and a major global manufacturing hub. Three schemes have been offered in the steel industry to address wide challenges of national interest, support open research proposals from academia and researchers, and help early-stage start-ups develop steel technologies. The increase in engineering exports to the US was driven by an increase in shipments of aircraft parts, electrical machinery, automobiles, industrial machinery, and medical instruments.
The Indian government is promoting innovative technologies and introducing more Production-Linked Incentive (PLI) schemes as measures to address the challenges faced by the steel sector, which includes the adoption of artificial intelligence and machine learning, digitisation, and decarbonisation.
The Steel Research Technology Mission of India (SRTMI), a joint initiative of the Indian steel industry and academia, is aimed at promoting growth in the sector by identifying and solving critical sector challenges, supporting open research proposals, and helping early-stage start-ups develop cutting-edge steel technologies.
