India will need to invest more than $400 billion across its steel ecosystem over the next two decades to meet its 2047 steel demand target, but the scale of expansion could be difficult to finance without continued protection from imports, according to HSBC.
The draft National Steel Policy Vision 2047 projects steel demand rising to 505 million tonnes by 2047, from 164 million tonnes in FY26, implying a compound annual growth rate of 5.2%. Meeting that demand would require steel capacity to increase from 220 million tonnes in FY26 to 604 million tonnes by 2047, adding 384 million tonnes of capacity.
HSBC estimates that current greenfield steel projects cost around $1 billion for every million tonnes of capacity, with costs likely to rise. The investment requirement also extends beyond steel plants to mining and railway infrastructure. The industry would need to spend more than $20 billion annually, making sustained cash generation critical to financing new capacity.
The report's case for import protection rests on the relationship between steel prices, industry cash flows and investment requirements. HSBC estimates that an 11% safeguard duty accounts for around 30-50% of recent EBITDA per tonne for listed Indian steelmakers. At Chinese hot-rolled coil prices of $500 a tonne, the industry's annual cash profit pool without duty protection would be below $10 billion, compared with the more than $20 billion in annual capex HSBC says the industry would need to undertake.
The funding challenge is compounded by the industry's concentration. HSBC notes that India now has only five large steel companies with capacity exceeding 10 million tonnes each. Sustaining the proposed investment cycle would therefore require these producers to generate strong cash flows over an extended period. HSBC believes continued policy protection from imports is necessary to support those cash flows at current regional prices.