The growth target for domestic steel demand for the current fiscal year has been lowered by ICRA to 9–10%. The organization credited the strong demand from steel-consuming industries and the government’s heavy spending for this encouraging change. The organization reported that domestic steel consumption increased by 11.3.
percent between February and April of 2024. According to the research, government spending on capital projects persisted until February 2024. After that time, industries including real estate and housing were crucial in sustaining the strong demand for steel.
The rating agency revised its steel demand growth prediction for FY25 to 9–10%, citing these new tendencies. The sector’s profits forecast for FY2025 has been revised upward as a result of this change, which is an improvement above the prior estimate of 7-8%, according to the research.
In a significant boost to India’s steel sector, credit rating agency ICRA has revised its growth target for domestic steel demand upward, citing strong infrastructure spending, robust manufacturing activity, and a steady rise in urbanization. The revised outlook signals positive momentum for the industry, with demand expected to surpass initial projections.
Strong Growth Drivers
ICRA’s revised forecast comes on the back of multiple factors driving steel consumption. The government’s continued push for infrastructure development, including large-scale road, railway, and metro projects, has played a crucial role in sustaining demand. Additionally, the expanding construction and real estate sectors, supported by urbanization and housing demand, have contributed to the rising need for steel.
India’s manufacturing sector is also witnessing steady expansion, particularly in the automobile and capital goods industries, which are among the key consumers of steel. The Production-Linked Incentive (PLI) schemes introduced by the government to boost domestic manufacturing are further expected to strengthen demand.
Revised Growth Outlook
Initially, domestic steel demand was projected to grow at a moderate pace. However, with recent trends showing higher-than-expected consumption, ICRA has raised its growth forecast. While the agency has not disclosed specific numbers in the latest update, industry estimates suggest that India’s steel demand could grow at a rate exceeding 8-10% in the coming fiscal year.
The bullish outlook is also backed by a stable global steel market and India’s increasing steel exports. Despite global economic uncertainties, India’s relatively insulated domestic demand continues to drive industry expansion.
Challenges and Industry Response
While the outlook is positive, challenges remain. High raw material costs, including iron ore and coking coal prices, continue to put pressure on steel manufacturers. Additionally, concerns about global economic slowdowns and geopolitical tensions pose risks to long-term stability.
To counter these challenges, Indian steelmakers are investing in capacity expansion, technology upgrades, and sustainability initiatives. Many leading players are focusing on green steel production to align with global environmental goals. The adoption of energy-efficient technologies and carbon-neutral manufacturing processes is gaining traction as companies aim to stay competitive in an evolving market.
ICRA’s upward revision of steel demand growth underscores the resilience of India’s economy and its infrastructure-led expansion. With strong government policies, increased private sector participation, and rising urban demand, the domestic steel industry is poised for a sustained growth trajectory.
As the sector navigates global uncertainties, continued investment in innovation and sustainability will be crucial in maintaining long-term competitiveness. With positive momentum in place, India’s steel industry is set to play a pivotal role in the country’s economic growth.
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