Going forward, domestic steel mills are targeting capacity expansion of nearly 40 per cent through till FY31, adding 80-85 mt, translating into an investment pipeline of $ 45-50 billion. So, Jhunjhunwala points out that continuing the safeguard duty will be vital to prevent a surge in imports and protect domestic prices from external shocks. While in FY26, the industry operating profit per tonne is expected to hold at around $ 108, similar to last year, the industry’s earnings must meaningfully improve from hereon to sustain large-scale investments. Else, domestic mills could experience a significant spike in industry leverage levels over the medium term, increasing their vulnerability to external macroeconomic shocks.(~$ 60/tonne) over the past one month, compressing the import parity discount to ~$ 23-25/tonne from previous highs of ~$ 70-90/tonne, adds Jhunjhunwala. With this, he says, “the industry can expect high resistance to further steel price increases.”Domestic HRC prices have increased by ~Rs 5,000/tonne “Aggressive capacity additions (~15 mt commissioned in FY25, with 5 mt more by FY26) have created a supply overhang, temporarily outpacing demand growth of ~11-12 mt,” he says. The result has been softer prices during the first nine months of FY26. Consequently, ICRA expects steel demand growth to moderate to ~8 per cent in FY2026.However, the Government’s capital expenditure drive in the steel-intensive sector has moderated over the FY21-FY24 peaks and, hence, the domestic momentum in India’s steel sector is expected to face some headwinds in FY26, believes Jhunjhunwala. On the demand side, Garg notes that current government spending on infrastructure projects like railways, airports, ports, road network, new smart cities and new cluster development will be a game changer for steel consumption. “Steel is finding usage in commercial, institutional and logistics buildings like never before and we are in a sweet spot to become a true global powerhouse driven by steelmaking and consumption,” he says.Future tidings“Formalising scrap flows will increase the availability and quality of recycled steel, aggregates and construction inputs, thus supporting cost optimisation for developers, reducing dependence on virgin raw materials and aligning projects with sustainability benchmarks increasingly demanded by lenders, investors and ESG-focused stakeholders,” he says. “Projects that demonstrate closed-loop material use, responsible scrappage and traceable recycling gain stronger social licence to operate, easier access to green finance and improved brand credibility.”Further, the End-of-Life Vehicles-linked EPR norms will ensure that metal scrap entering the market, particularly steel, comes through authorised, environmentally compliant channels.Introducing ‘Extended Producer Responsibility’ means waste generators registered on a portal for a building or building complex project with a built-up area of 20,000 sq m and above are now obligated to manage C&D waste throughout its lifecycle, points out Sanjay Mehta, President, Material Recycling Association of India. “This includes recycling and reusing waste materials, with specific targets for waste utilisation in future construction projects. Starting from 2026-27, at least 5 per cent of materials used in construction must be recycled waste, increasing to 25 per cent by 2030-31.”With the Ministry of Environment, Forest and Climate Change recently notifying the Environment (Construction and Demolition) Waste Management Rules, 2025, to come into effect from April 1, 2026, the growing issue of construction and demolition (C&D) waste, including scrap steel, will be addressed, provided the regulation can be effectively monitored.Scrap availabilitySo, while India’s green steel ambition is strategically aligned with global trends, its realisation remains a long-term aspiration rather than an imminent shift, with economics, technology readiness and policy support determining the pace and scale of adoption.$ 1.5-1.6 per kg, yet current green hydrogen prices exceed $ 3 per kg.”“Greening steel introduces new costs and compliance burdens across the value chain,” he adds. “But green hydrogen-based DRI and carbon capture are far from cost-effective today. The break-even cost for hydrogen in steelmaking, for example, is estimated around But the scene isn’t all green. “Green steel benchmarks far below current emission levels – major Indian producers average ~2.5 tCO2/t – highlight the emissions gap to be closed,” points out Sumit Jhunjhunwala, Vice President & Sector Head, Corporate Sector Ratings, ICRA. Steelmakers are now prioritising decarbonisation in their strategies with primary producers announcing about 9 gw of captive renewable power projects; alongside higher scrap melting and efficiency upgrades, this is expected to cut emission intensity by ~19 per cent by FY30 (targeting ~2.0 tCO2/t). However, the limited availability of scrap for scrap-based electric arc furnace (EAF) capacity and higher green hydrogen prices remain bottlenecks for the largescale adoption of technology in the near term and significant lowering of carbon emissions.Pushing green steel through procurement norms favouring domestic and green steel in public projects has further boosted demand, which grew 8 per cent in 2025, and has seen large firms investing in hydrogen-based production and recycled scrap, observes Singh. “With green steel exports expected to command up to a 15 per cent premium, especially in Europe and Japan, major players have announced multibillion-dollar expansions to meet rising needs.”Green gapsHe believes further investments in logistics and supply chain efficiency to cut transport costs are due. Pursuing green steel transitions and policy stability to build global exports would also assist the sector and users.Director, Planning, Uniqcore Constructions India.“Protective measures add smaller costs to the supply chain for downstream users like the construction and auto sectors through higher domestic steel prices,” says G Boopathi, “Our experience suggests that stability and predictability help the most,” he continues, while advocating a more calibrated approach to manage the sector. “Combining policy continuity with flexibility during supply tightness and better coordination between steel producers and large rail programmes would go a long way in easing costs while supporting India’s infrastructure momentum.”In railways, for instance, steel is a core input across electrification, signalling structures and system integration. Any volatility directly impacts execution planning and working capital. Noting that the “intent of the current steel policy is clearly to strengthen domestic capability by building capacity, improving quality and reducing long-term dependence on imports, a positive and necessary measure for a country investing heavily in infrastructure,” in the short term, Sourajit Mukherjee, CEO, e2E Rail says, “Frequent policy changes can add pressure across the supply chain, particularly for sectors executing long-cycle projects.”Supply chain pressuresSingh additionally observes that while new policies are facilitating advancements and encouraging domestic firms to pursue technological improvements, the additional operational requirements they present may create difficulties, particularly for smaller entities. He believes these complexities should be addressed through targeted assistance and comprehensive regulatory frameworks to contribute to a more balanced progression for all industry participants.“Anti-dumping duties and other measures shield steel makers in India from international steel dumping but don’t push them to work hard on internal efficiencies to be cost effective,” says Garg. “If India is to become a truly global power in steel making and its consumption, it shouldn’t depend on any safeguard duties, etc. Rather, ask steelmakers to be competitive in their cost structures.”Protective measures to curb cheap imports have supported local capacity utilisation but have not necessarily made them more competitive. Missing competitivenessDespite these positive measures, industry voices speak of gaps that need to be addressed. India’s new national steel policy mandates huge capacity addition to existing steel capacity, which means good quality steel will be available in India in plenty and domestic consumption will also get a huge push, says Manish Garg, Chief Executive Officer, Interarch Building Products. “Capacity additions would also make Indian steel globally available to serve demand in north America and other countries,” he adds. During Q3 FY26, India’s finished steel consumption grew by 4.6 per cent year-on-year (Y-o-Y) to 40.74 mt, while crude steel production rose by 10 per cent Y-o-Y to 42.50 mt. During the quarter, steel imports fell by 42.4 per cent Y-o-Y while exports grew 35.5 per cent Y-o-Y.Satnam Singh, Senior Practice Leader & Director, Crisil Intelligence, believes government policies are helping India’s steel industry to transform, pointing out that “while domestic steel prices fell about 6 per cent in 2025 due to global market softness, major producers increased market share and pushed capacity utilisation to 84 per cent.”Transformation pathRobust government support for the Indian steel sector has paid off. Policy interventions such as anti-dumping duties – most recently, an anti-dumping duty on hot rolled coil (HRC) from Vietnam in November 2025 and cold-rolled non-oriented electrical steel from China in December 2025 – a safeguard duty on flat products formalised for three years in December 2025, green steel mandates and procurement norms have helped the sector see about 11-13 per cent annual growth over the past four years, making it a rare bright spot amid a sluggish global market.CW explores the impact of pro-steel policies on construction and infrastructure and identifies gaps that need to be addressed.