India’s Steel Sector Set for 9% Growth, Smaller Mills Struggle with Costs: Crisil SME Tracker

New Delhi, Aug 26 (KNN) India’s steel industry is witnessing a strong growth cycle, with demand expected to rise by 8.5–9.5 per cent in FY26, higher than the decade-long average growth rate of 7 per cent.

According to the Crisil SME Tracker, this surge is being driven mainly by infrastructure and construction activity.

Production of long steel saw an 8.7 per cent year-on-year increase in the first quarter of FY26, with mid-sized and small mills playing a key role by contributing 72.4 per cent of the output.

Analysts suggest that this positive trend is likely to continue, supported by a decline in imports and steady demand across key sectors.

Crisil estimates that crude steel production could record a 10–12 per cent year-on-year growth this fiscal. Much of this will be powered by government capital expenditure, routed through major ministries including railways, roads, rural and urban development, power, renewable energy, and civil aviation.

These sectors are expected to provide a strong boost to steel consumption in the coming quarters.

Despite the positive outlook, challenges remain for micro, small, and medium enterprises (MSMEs) in the steel industry. Rising input costs are putting pressure on margins, making it difficult for smaller players to fully capitalize on the rising demand.

While large steel producers may be able to absorb the cost increases more easily, MSMEs are likely to face financial strain unless they find ways to improve efficiency or receive supportive policy measures.

Overall, while India’s steel demand and production outlook appear robust, MSMEs in the sector will need to adapt to rising costs to sustain growth and remain competitive in the evolving market.

(KNN Bureau)