India’s steel sector is expanding steadily despite a global slowdown in the steel industry, supported by b domestic demand, government measures, and capacity expansion, according to a report by Motilal Oswal. While global steel companies are facing slower growth amid weak demand, Indian steel producers continue to scale up operations, positioning India among the fastest-growing steel markets globally.
Motilal Oswal’s report states that demand from infrastructure, construction, and manufacturing remains firm, providing sustained support to the sector. Government policy support and measures to protect domestic producers have contributed to improved operating conditions for Indian steel companies.
According to the report, steel sales volumes in India are expected to grow at an annual rate of 8–10 percent between financial year 2025 and financial year 2028. The brokerage attributes this outlook to continued demand from key end-use sectors.
The imposition of a 12 percent safeguard duty by the government has provided relief to domestic companies from low-cost imports. The measure has helped stabilise prices and supported profitability across the sector.
The report notes that China, previously the largest driver of global steel growth, is currently experiencing weak domestic demand, while elevated exports have exerted pressure on global steel prices. However, Motilal Oswal believes Chinese steel exports have reached their peak. The brokerage adds that increasing protectionist measures and trade policies globally could lead to lower production and exports from China, with implications for global steel prices.
Domestic steel prices had declined after financial year 2023, weighing on sector earnings. The report indicates that conditions are now improving, supported by the safeguard duty, stabilisation in global prices, and easing costs of raw materials such as coking coal and iron ore. These factors could support an improvement in profitability.
Motilal Oswal expects a recovery in sector earnings in financial years 2027 and 2028.
Indian steel companies are undertaking large-scale capacity expansion to meet anticipated demand over the coming years. Most major producers are setting up new units and expanding existing facilities. The report also highlights that companies have reduced debt levels over recent years, strengthening balance sheets and enabling expansion plans with lower financial stress. This is expected to support long-term stability and profitability.
Motilal Oswal has identified JSW Steel, Tata Steel, and Jindal Steel as its preferred steel companies. The brokerage notes that JSW Steel is preparing to increase production with a focus on cost control and higher value-added steel. Tata Steel has a b domestic business, while conditions in Europe are gradually improving, which could support future performance. Jindal Steel is expanding capacity rapidly, producing higher-quality steel, and maintains lower debt levels.
For state-owned Steel Authority of India Limited, the brokerage has maintained a neutral rating. While expansion prospects exist, the report flags ongoing challenges in steel production, higher costs, and rising debt levels, which could affect near-term performance.
