India to Remain Among World’s Fastest-Growing Steel Markets in FY27: India Ratings

India is expected to retain its position as one of the world’s fastest-growing steel markets in FY27 despite global challenges, according to a new report by India Ratings and Research (Ind-Ra). The domestic steel industry is projected to benefit from sustained infrastructure investments, healthy construction activity and rising demand from engineering and automotive sectors, even as global steel markets continue to grapple with oversupply and geopolitical uncertainties.

The rating agency has maintained a neutral outlook on the Indian steel sector for FY27, stating that strong domestic demand and supportive government measures are likely to keep the industry’s financial performance stable. India Ratings expects steel consumption to register high single-digit growth during the financial year, improving over the 7.4 per cent growth recorded in FY26.

The report noted that the government’s continued capital expenditure on roads, railways, urban infrastructure and industrial projects will remain the primary driver of steel demand. Increased activity in residential and commercial construction, engineering projects and automobile manufacturing is also expected to support higher steel consumption across the country.

India Ratings further highlighted that the financial position of steel companies has improved significantly over the past few years. Stronger balance sheets are expected to help manufacturers continue investing in capacity expansion without placing excessive pressure on debt levels. However, the agency cautioned that the execution of large expansion projects will remain a key area to monitor.

While domestic fundamentals remain favourable, the report also pointed to several external risks. Global steel markets continue to face oversupply, while geopolitical tensions, evolving trade barriers and stricter environmental regulations could influence exports and profitability. In particular, the European Union’s Carbon Border Adjustment Mechanism (CBAM) and lower import quotas for steel exports to Europe may pose challenges for Indian producers targeting overseas markets.

Raw material price volatility also remains an important risk for the industry. Fluctuations in the prices of iron ore and coking coal could affect production costs and margins. Nevertheless, India Ratings believes supportive trade policies, stable raw material availability and disciplined capacity expansion will help the sector maintain healthy profitability and cash flows.

With infrastructure-led economic growth continuing to drive steel demand, India is expected to remain a bright spot in the global steel industry, offering long-term opportunities for manufacturers and investors despite an uncertain international market environment.