For more than two decades, China’s rapid urbanization and construction boom determined the fate of the global steel industry. Today, when steel demand in China is slowing and mining companies are looking for new growth markets, attention is increasingly shifting towards India. BHP and Rio Tinto executives this week pointed to India and South-East Asia as the next big centers of growth in steel demand. They argue that spending on infrastructure, industrialization and urbanization can help compensate for lower consumption in China.
According to data from the Joint Plant Committee under India’s Steel Ministry, Indians used only 108 kg of finished steel per capita in 2024-25. This is one-fifth of China’s 601 kg and almost half the global average of 215 kg. This difference explains why global mining and steel making companies consider India as one of the most important growth markets for the industry. If India is poised to become the industry’s next growth story, it is unlikely that it will follow the same path.
A different way to start
The hope for India rests on a simple truth: despite having such a big economy, steel consumption here is very low. According to the Steel Ministry report, India produced about 165 million tonnes of crude steel last year and aims to rapidly increase its capacity in the coming decades. Per capita steel consumption is a small fraction of the consumption seen in China’s construction peak years. This shows that as people’s income increases and urbanization occurs rapidly, there is a lot of scope for growth.
Vinod Kumar, partner and manufacturing sector leader at PwC India, said that India and ASEAN will emerge as the next engine of growth in steel demand. But he also said that this growth should be seen as a gradual increase rather than copying China’s historical expansion. Unlike China in the early 2000s, India is not experiencing a once-in-a-generation property boom. Instead, steel demand is being driven by a combination of infrastructure projects, manufacturing expansion and urban growth.
Infrastructure remains the largest consumer of steel and accounts for about 60%-65% of the demand. At the same time, manufacturing is also emerging as an important contributor as companies are increasing their production under government-supported industrial programs.
challenge to complete the task
China’s emergence as a steel powerhouse depended on its ability to rapidly mobilize land, capital and labor for industrial projects. India’s growth story will probably move forward slowly. Large manufacturing and infrastructure projects are often delayed by land acquisition, environmental clearance and local opposition. Property ownership can be fragmented, regulations vary across states, and industrial projects often take years from approval to completion.
These challenges are especially visible in Eastern India, where the country’s largest steel-producing areas and mineral reserves are located. Industry officials say these hurdles do not stop projects, but often lengthen investment cycles, which China largely avoided during its industrial expansion. This means that India’s steel growth may ultimately be more sustainable, but not as fast.
Speaking to Bloomberg, Rajat Gupta, senior partner at Mumbai-based consultancy McKinsey & Company, said that investment in China was made by government companies, which increased capacity rapidly. He further said that in India it is largely based on the private sector.
Build factories, not apartments
Perhaps the biggest difference lies in where the steel will be used. The huge demand for steel in China was mainly related to residential construction and property development. Apartment complexes, commercial real estate and city building projects created huge demand for steel products. India’s growth is increasingly being shaped by manufacturing targets. Prime Minister Narendra Modi’s “Make in India” initiative aims to make the country a global manufacturing hub, thereby promoting investment in automobiles, engineering goods, electronics and industrial equipment.
The government’s emphasis on infrastructure is equally important. Funds for capital expenditure have increased steadily over the past decade, funding highways, ports, airports, freight corridors and high-speed rail projects. The result is that the demand pattern for steel will be more diversified than that of China.
Raw material challenge
India’s steel-related targets face a challenge that China did not have to face much. The country has large reserves of iron ore, but it is largely dependent on imports for the metallurgical coal required for making steel in blast furnaces. Even though India is the second largest steel producing country in the world, its difference with China is huge. According to preliminary data from the World Steel Association, India produced 149.4 million tonnes of crude steel in 2024, while China produced 1,005.1 million tonnes.
In other words, last year China produced almost seven times more steel than India. The third and fourth largest producing countries, Japan and America, produced 84 million tonnes and 79.5 million tonnes respectively. This shows that India has emerged as a strong second pillar in global steel production, even though it is still far behind China in the scale of production.
Import of finished steel increased from 4.75 million tonnes in 2020-21 to 9.55 million tonnes in 2024-25, which is more than double. At the same time, during the same period, exports decreased from 10.78 million tonnes to 4.86 million tonnes. Due to which India became a net importer of 4.69 million tonnes of finished steel in 2024-25, which was the largest trade deficit during this period. However, preliminary data for April-July 2025-26 has shown a slight improvement. In this, exports of 1.70 million tonnes were slightly more than imports of 1.67 million tonnes, due to which India once again became a minor net exporter.
As steel production is increasing, Indian companies are turning abroad to secure supplies. Along with Australia, new suppliers like America, Canada, Mongolia, Russia and Mozambique also remain important sources. The search for raw materials is becoming more urgent as the government works towards achieving its long-term target of producing 500 million tonnes of steel by 2047. Additionally, declining ore quality, higher premiums for mines and auction-related mining costs could put additional pressure on domestic producers. Unlike China, which spent decades acquiring mineral assets abroad during a surge in demand, India is trying to build a supply chain as well as increase production.
development from a carbon perspective
Another big difference is time. China built much of its steel industry when climate concerns had not become a major policy issue. India does not have this facility. The country’s steel making companies are being asked to increase production and at the same time reduce emissions. India plans to reduce carbon emissions from steel production from current levels (about 2.65 tonnes) to about 2 tonnes of carbon dioxide per tonne of finished steel by the middle of the next decade, according to a draft government policy seen by Reuters.
This pressure has increased further after the ‘Carbon Border Tariff’ of the European Union. This tariff imposes a duty on the import of products with high carbon emissions. In such a situation, scrap steel, gas-based steel manufacturing and clean production technologies are expected to be used more in future development. In fact, along with building a big steel industry, India is also trying to make it greener.
No alternative, but a new chapter
For mining companies like BHP and Rio Tinto, India’s rise as China matures is becoming an important source of future demand. Nevertheless, analysts caution against considering India as a direct alternative to China. CRISIL Intelligence Director Sehul Bhatt said in an ET report that China’s stake is so large that it can drag down global demand as it cannot be compensated by the increase in demand from India and other Asian countries. Despite this, the industry does not see any significant alternative.
The era of China’s steel-based expansion is now on the decline. Most of the next wave of increase in demand will come from India. But this rise of the country will be determined by manufacturing, infrastructure, resource security and decarbonization (reducing carbon emissions) rather than a huge boom in the property market. This makes India’s steel story not a repeat of China’s story, but a completely different chapter in the development of the global steel industry.
