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India’s steel industry is expanding rapidly, but this growth comes with a serious challenge — an overwhelming dependence on imported coal. According to a report by the Institute for Energy Economics and Financial Analysis (IEEFA), nearly 85% of India’s metallurgical coal is sourced from abroad. With 64% of new steel capacities also planned to use the traditional coal-based blast furnace route, this dependence is unlikely to ease anytime soon.
India’s steel industry increasingly faces major risks related to long-term energy security.
India aims to reach 300 million metric tons of crude steel capacity by 2030 which implies significant rise in demand for coking coal — approximately 800 kg per ton of steel produced. The planned blast furnace capacity alone could demand an additional 140 million tons of coal, nearly double the current import levels. This puts India in a vulnerable situation, heavily exposed to global supply disruptions and price fluctuations.
Can US Coal Fill the Gap?
India has been diversifying its coal suppliers, with the United States emerging as its second-largest supplier. America’s share grew from around 7% in 2021 to roughly 16% in 2024–25. However, the IEEFA cautions that switching suppliers does not protect India from global price volatility, as Australia still controls nearly half of all seaborne met coal exports and sets the benchmark price worldwide. Logistically, US coal faces another disadvantage – Shipments from the US take around 45 days to reach India, compared to just 25 days from Australia. While US coal may be priced lower at the point of origin, higher freight costs — worsened by the ongoing West Asia crisis — often eliminate that cost advantage.
The Path Forward
Despite government initiatives like “Mission Coking Coal,” India’s domestic reserves remain largely unsuitable for steelmaking due to their high ash content. The IEEFA strongly recommends that India accelerate its shift toward scrap-based electric arc furnace steelmaking and invest in green hydrogen-based production to reduce long-term coal dependency and strengthen energy security. India’s steel ambitions are bold — but building them on imported coal remains a significant and growing risk.
