India's goal of 604 million tonnes of steel capacity by 2047 will need more than $400 billion of investment, and steelmakers may not be able to fund it without continued protection from cheap imports, according to HSBC.
At a glance
- HSBC estimates new greenfield steel plants cost about $1 billion per million tonnes of capacity.
- The 11% safeguard duty accounts for around 30-50% of listed steelmakers' recent EBITDA per tonne.
- HSBC thinks the draft policy's demand forecasts are conservative.
Background
India's draft National Steel Policy Vision 2047 aims to lift steel capacity from 220 million tonnes in FY26 to 604 million tonnes by 2047. India applies an 11% safeguard duty on steel imports, a temporary tariff that shields domestic mills from cheap foreign steel.
What HSBC found
India's steel ecosystem will need more than $400 billion of investment over the next two decades to meet its 2047 demand target, HSBC said in a report covered by Moneycontrol. The draft policy projects steel demand rising to 505 million tonnes by 2047 from 164 million tonnes in FY26, a 5.2% annual growth rate.
That would require adding 384 million tonnes of capacity. HSBC estimates greenfield plants cost about $1 billion per million tonnes, with costs likely to rise, and the industry would need to spend more than $20 billion a year.
Why import protection matters
The money has to come from steelmakers' own cash flow. HSBC estimates that the 11% safeguard duty accounts for around 30-50% of recent EBITDA per tonne at listed Indian steelmakers. If Chinese hot-rolled coil stayed at $500 a tonne and the duty were removed, the industry's annual cash profit would fall below $10 billion, half of what it needs to invest.
Only five Indian steel companies have more than 10 million tonnes of capacity each. They would have to generate strong cash flows for many years to sustain the build-out, which HSBC says requires continued protection at current regional prices.
What else the plan demands
The expansion goes beyond steel plants. HSBC expects more iron ore mining, much higher coking coal imports and possibly more scrap imports than the policy assumes. The policy projects coking coal demand rising 3.3 times and scrap demand 3.4 times their 2025 levels by 2047.
Emissions are another hurdle. The plan aims to cut emissions to 1.54 tonnes of carbon dioxide per tonne of steel by 2047, from 2.54 tonnes now, which is above the global average of 1.92 tonnes.
Our read
Outlook: bullish. A long build-out of Indian steel capacity would raise demand for iron ore and coking coal. The timeline runs to 2047, so near-term effects are small.
What to watch
- Any decision to extend or change India's 11% steel safeguard duty.
- The final version of the National Steel Policy Vision 2047.
- Chinese hot-rolled coil prices, which set the competitive threat to Indian mills.
For information only, not investment advice.
Iron price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-16: HSBC says India's steel plan needs over $400 billion and continued import protection.
Demand Drivers
Construction and infrastructure make up 67% of India's steel use, and per capita use is projected to rise to 302 kg by 2047.
Supply Drivers
Expansion would need more iron ore mining and much higher coking coal imports.
Trade Tariffs
The 11% safeguard duty is a large share of Indian steelmakers' current margins.
What could lift prices
- Adding 384 million tonnes of steel capacity would greatly increase demand for iron ore.
- HSBC sees India's demand projections as conservative.
What could weigh on prices
- Without import protection, Indian mills may lack the cash to fund new capacity.
- Rising project costs could slow the expansion.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | High | Its steel growth plan depends on financing a huge expansion of capacity. |
| China | Medium | Cheap Chinese hot-rolled coil is the main threat behind India's safeguard duty. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Steel Manufacturing | Neutral | Strong demand prospects come with heavy capital and financing needs. |
| Iron Ore Mining | Positive | More steel capacity would require more domestic iron ore mining. |
Who gains, who loses
- Large Indian steelmakers: HSBC's case supports keeping the safeguard duty that protects their margins.
- Steel users in India: Continued import protection supports domestic steel prices, which users pay for.
Other ways this could play out
- If the safeguard duty is kept, steelmakers could fund faster expansion from cash flow.
- If it is removed, cheap imports could squeeze margins and slow new projects.
Price risks
- A drop in Chinese steel prices would increase pressure on Indian mills' margins.
- Higher coking coal import costs could raise production costs.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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