India’s steel demand is expected to grow by around 8% in the fiscal year 2025-26, but domestic steelmakers are likely to continue facing pressure on margins, according to a report released by ratings agency ICRA on December 22.
ICRA forecasts industry operating margins to remain broadly flat at around 12.5%, lower than earlier expectations of a 100–120 basis point improvement, citing soft steel prices, sticky input costs, and a weak global environment.
Muted earnings are expected to push industry leverage higher, with total debt to operating profit (TD/OPBDITA) projected at about 3.4 times in FY 2025-26, compared with 3.1 times estimated earlier and 3.5 times recorded in FY 2024-25.
The agency noted that India’s steel sector has added around 15 million metric tons of capacity over the past three to four quarters, with an additional 5 million mt expected by the end of the current fiscal year.
Domestic hot rolled coil prices peaked at INR 52,850 per mt in April 2025 following the imposition of a 12% safeguard duty, before declining to INR 46,000 per mt by November, falling below import parity due to supply-side pressures.
While finished steel imports have fallen by about 33% year on year, ICRA warned that rising trade barriers in markets such as the US and EU could divert surplus global supply toward India. In this context, the agency stressed that the continuation of safeguard duties remains critical to protect domestic prices.
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