As India accelerates its infrastructure ambitions, its largest public sector steelmaker, Steel Authority of India Limited (SAIL), is ramping up production capacity to meet surging domestic demand. The company has announced a capital expenditure (capex) outlay of ₹7,500 crore for FY26, marking a 25% increase over the previous year’s investment — a decisive move to scale capacity, modernise operations, and align with India’s long-term steel vision.
India’s Infrastructure Push Meets SAIL’s Growth Strategy
India is currently experiencing robust growth in infrastructure, construction, and manufacturing, leading to a projected 8–9% increase in domestic steel consumption in 2025–26. Against this backdrop, SAIL’s expansion strategy aims to increase its annual crude steel capacity from approximately 20 million tonnes to 35 million tonnes by 2030, in line with the Government of India’s 300 MTPA target under the National Steel Policy.
SAIL’s Q1 performance further reinforces the momentum. The company reported ₹885.93 crore in net profit and 4.55 million tonnes in sales a 15% year-on-year growth, driven by improved efficiency and steady market demand. It has already utilised ₹1,642 crore of the FY26 capex budget in the first quarter alone.
Multi-Plant Expansion Underway
SAIL’s expansion strategy focuses on key brownfield upgrades rather than new greenfield developments. The company is currently advancing major projects at:
- IISCO Steel Plant (West Bengal): Capacity to be expanded from 2.5 MTPA to 4.5 MTPA. Tendering is underway.
- Durgapur Steel Plant (West Bengal): A brownfield project will increase output from 2.2 MTPA to 3.09 MTPA, with greenfield possibilities under review.
- Early-stage planning is also underway for expansion at Bhilai, Bokaro, and Rourkela plants.
These developments are designed to enhance both volume and product value in construction-grade steels, automotive grades, and structural products.
Top 5 Product Categories Benefiting from Expansion
- Hot Rolled Coils & Sheets
- Rebars for Infrastructure Projects
- Structural Steel Sections
- Wire Rods for Automotive & Engineering
- Stainless Steel Plates (via IISCO capacity boost)
Challenges on the Horizon
While the growth outlook remains strong, SAIL faces headwinds from global overcapacity and a potential influx of low-cost imports, particularly from China, Vietnam, and the Middle East. This pressure could impact margins in H2 FY26, especially if infrastructure execution slows or pricing volatility increases.
Focus on Raw Materials and Sustainability
SAIL is also moving to strengthen supply chain resilience. It has begun tapping its Tasra captive coal mine to reduce reliance on imported coking coal. Parallel efforts are underway to enhance iron ore logistics and reduce input costs through technological upgrades and energy efficiency.
As sustainability becomes a global priority, SAIL is also exploring early adoption of low-carbon steelmaking practices, digital plant operations, and emission tracking — all critical steps for future-proofing exports and aligning with global buyer requirements.
Government Alignment and Policy Support
The expansion strategy benefits from alignment with central policy frameworks, including:
- The PLI Scheme for Speciality Steel
- Faster environmental clearances
- Support under the National Infrastructure Pipeline (NIP)
Such alignment ensures that capital investments are well-supported by demand visibility and regulatory efficiency.
A Measured but Confident Push Forward
SAIL’s ₹7,500 crore FY26 capex plan reflects confidence in India’s steel consumption story, backed by strong execution in Q1. While risks remain, particularly in pricing and imports, the company’s multi-plant upgrade strategy and alignment with national goals position it well to meet future demand.
As India builds the next generation of highways, bridges, ports, and metro systems, steel remains at the core. And SAIL appears determined to supply it, efficiently and at scale.
Sources
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