Steel PSU capex to rise 44% in FY27 on improving demand outlook

India’s public sector steel companies are preparing for a significant investment push in the coming financial year, with capital expenditure projected to rise by nearly 44 percent to about ₹25,125 crore in FY27. Budget documents indicate that the increase will be driven largely by Steel Authority of India Limited and National Mineral Development Corporation, reflecting renewed confidence in domestic steel demand and long term capacity expansion plans.

SAIL is expected to lead the capex cycle, with planned spending of around ₹15,000 crore in FY27 compared to ₹10,000 crore in FY26. The company is focusing on modernisation, expansion of existing facilities and efficiency improvements across its integrated steel plants. NMDC, a key supplier of iron ore, is also stepping up investments, with capex estimated to rise to ₹9,000 crore from ₹6,000 crore in the current year. Manganese Ore India Limited is expected to increase spending to ₹800 crore, supporting raw material availability for the sector.

The higher capital allocation comes at a time when India’s steel industry outlook is gradually improving despite global uncertainties. Analysts believe recent softness in consumption has been seasonal rather than structural, with demand expected to strengthen from FY27 onwards. Recovery in the automobile sector, continued infrastructure expansion, steady manufacturing activity and resilient end user industries are likely to support higher steel offtake in the medium term.

India is currently the world’s second largest producer of crude steel and has set an ambitious target of achieving 300 million tonnes per annum capacity by 2030–31 under the National Steel Policy. Industry estimates suggest that planned capacity additions of 80 to 85 million tonnes over this period will require investments of around $45 to $50 billion, underlining the importance of sustained capex by both public and private players.

Alongside capacity growth, the steel sector is also beginning to transition towards low emission production. Rating agencies estimate that green steel will account for a steadily rising share of domestic demand over the coming decades. This shift is expected to influence future investment decisions, with public sector companies playing a key role in balancing expansion, efficiency and sustainability goals.