Steel PSUs Plan Sharp Rise in Capital Spending from FY27 on Capacity and Transition Needs

Capital expenditure by public sector steel companies is expected to increase significantly from FY27, according to budget documents. 

Higher allocations by major producers reflect plans to expand capacity, strengthen raw material security and prepare for longer-term shifts in demand and technology, even as global steel markets remain uneven.

Capex Plans of Key Steel PSUs

Capital expenditure by steel public sector undertakings is projected to rise by nearly 44% in FY27, reaching around ₹25,125 crore. The increase will be primarily funded through internal accruals and extra budgetary resources.

Steel Authority of India Limited (SAIL) is expected to account for the largest share, with planned spending of ₹15,000 crore in FY27, compared with ₹10,000 crore in FY26.

National Mineral Development Corporation (NMDC) has outlined capex of ₹9,000 crore, up from ₹6,000 crore in the current financial year.

Manganese Ore India Limited (MOIL) plans to raise its spending to ₹800 crore, from ₹600 crore in FY26.

India’s Steel Capacity and Policy Targets

India currently produces about 205 million tonnes per annum (mtpa) of crude steel, making it the world’s second-largest producer after China. Under the National Steel Policy 2017, the country aims to scale capacity to 300 mtpa by 2030–31.

Industry estimates suggest that upcoming capacity additions of 80–85 million tonnes over the period to 2031 would require investments in the range of $45–50 billion.

Outlook for Domestic Steel Demand

The planned rise in capex reflects expectations of improved prospects for the domestic steel industry. 

According to a recent research note by Nomura, the slowdown seen in steel consumption is viewed as largely seasonal rather than structural. 

The firm expects growth momentum to strengthen in FY27–FY28, supported by a recovery in the automotive sector, continued infrastructure spending, manufacturing growth and stable demand from end-user industries.

Shift Towards Green Steel

Alongside capacity expansion, the industry is gradually moving towards lower-emission production. Estimates by ICRA Ratings suggest that green steel could account for around 2% of total steel demand by FY2030, increasing to nearly 10% by FY2040 and further to about 40% by FY2050.

This transition is expected to influence future investment decisions, technology choices and cost structures across steel producers.

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Conclusion

The planned increase in capital expenditure by steel PSUs highlights efforts to align capacity growth with policy objectives and evolving demand trends. While near term conditions remain mixed, longer term investments in expansion and cleaner production indicate a measured approach to sustaining growth in India’s steel sector.

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