India Eyes 300 Mn Tonnes Steel Capacity by 2030, Seeks Coal Import Diversification

India is expanding its steel production capacity with a target of 300 million tonnes per annum by 2030. Approximately 64% of this planned expansion relies on the coal-based blast furnace method. Because domestic coking coal often has high ash and sulphur content, India currently imports about 90% of its metallurgical coal requirements.

To reduce its heavy reliance on Australia, which supplied 72% of its imports in financial year 2021, India has increased purchases from the United States. The US share of India’s coking coal imports grew from 8% in 2021 to 15% by 2025. A 2026 bilateral trade agreement further encourages this shift.

However, analysts warn that diversification alone does not guarantee energy security. The global market remains heavily influenced by Australia, which accounts for nearly half of all seaborne exports. Consequently, any disruption to Australian supply causes immediate price increases for alternative sources.

Technical and Economic Hurdles

Economic factors also limit the competitiveness of US coal. Shipments from the US take between 40 and 45 days to reach India, compared to 20 to 25 days from Australia. These longer transit times increase working capital requirements and supply chain uncertainty.

In addition, rising freight costs and global fuel shortages narrow the price advantage of US imports. Technical barriers further complicate the transition. Some major producers, such as Tata Steel, report that US-origin coal is not suitable for the stamp-charging technology used in many Indian plants.

Furthermore, US metallurgical coal exports are forecast to decline to 38mn tonnes by 2035. This decrease occurs as India’s import demand is projected to reach 149mn tonnes. To achieve true energy security, experts recommend transitioning toward scrap-based electric arc furnaces and green hydrogen. Reducing overall coal dependence is viewed as more effective than simply changing import sources.

Steel Sector Support Boost

The Indian government has introduced interest subvention benefits to such firms which export 167 specific iron and steel companies to improve liquidity and ease borrowing costs, reported The Economic Times.

The move aims to support MSME steelmakers amid high input costs and global price volatility, while encouraging capacity expansion and improving competitiveness in a sector heavily dependent on imported coking coal and exposed to global supply chain fluctuations.