JSW, JFE announce ₹5,845 Cr investment to scale steel production

In a landmark move announced on August 4, 2025, JSW Steel and JFE Steel unveiled a ₹58.45 billion joint investment to scale production of CRGO electrical steel in India. This strategic initiative underscores India’s ambition to build domestic capacity in high‑grade electrical steel—critical for energy‑efficient transformers, renewable power systems, and data centre infrastructure.

The partners plan to boost combined annual capacity to 350,000 tonnes, up from approximately 50,000 tonnes currently. By doing so, the joint venture—JSW JFE Electrical Steel Pvt. Ltd.—aims to significantly reduce reliance on imports while fostering technology transfer and industrial growth. ( JSW)

1. Joint Venture Origins & Evolution

Formation and Early Investment

• In February 2024, JSW Steel and JFE Steel established JSW JFE Electrical Steel Pvt. Ltd. (initially JSW Electrical Steel), a 50:50 joint venture headquartered in Bellary, Karnataka.
• A groundbreaking ceremony held on February 12, 2024, marked the start of construction for the Bellary facility. Production was initially slated to begin in fiscal 2027 with an initial ₹5,500 crore (≈ $734 million) investment.

Acquisition of Thyssenkrupp Electrical Steel India

• Changing course, the JV acquired 100% of Thyssenkrupp Electrical Steel India (tkES India) in October 2024 for around ₹4,051 crore, securing immediate production capacity and advanced German technology.
• tkES India operates a Nashik-based plant capable of producing 50,000 tpa of GOES and generated revenue of ₹1,271 crore in FY 2024.

Combining these investments, the JV’s total original outlay was ₹5,500 crore, covering the Bellary greenfield and the Nashik acquisition—setting the stage for future scale‑up.

2. The ₹5,845 Cr Expansion Plan

Investment Breakdown

• Total investment: ₹58.45 billion (₹5,845 crore) as per the August 2025 announcement, jointly funded by JSW and JFE as equal equity contributions of ₹19.66 billion each. The rest is expected to be funded through internal accruals or debt.

Capacity Expansion Targets

1. Nashik Plant: Output to rise from 50,000 tpa to 250,000 tpa. This 5× increase alone represents the bulk of the expansion, requiring ₹43 billion (~₹4,300 crore).
2. Vijayanagar (Bellary) Facility: Capacity to expand from the planned 62,000 tpa to 100,000 tpa, with ₹15.45 billion (~₹1,545 crore) allocated to this stage.

This phased ramp-up is designed to roll out from fiscal year 2028 onwards, with full incremental capacity online in stages.

3. Strategic Imperatives & Market Drivers

3.1 Surge in Domestic Demand

India’s accelerating investments in renewable power, smart grid infrastructure, EV deployment, and data centres have amplified the need for efficient transformers and motors, where CRGO steel plays a critical role. The domestic gap has been filled by imports, often at significant cost. Local manufacture promises cost‑competitiveness and energy-security benefits.

3.2 Import Substitution & Self‑Reliance

The JV explicitly aims to reduce import dependence by building indigenous GOES capacity. This contributes to India’s broader Atmanirbhar (self-reliant) vision, easing forex pressure and encouraging local value-addition.

3.3 Technology Transfer & Value‑Added Portfolio

Acquiring tkES India gave JSW‑JFE access to proprietary GOES technology, enabling production of high‑permeability grades, which are vital for high-efficiency transformers. These value‑added rolls also offer higher margins and global competitiveness.

4. Production Timeline & Integration Strategy

Timeline Overview

• February 2024: JV formed and ₹5,500 crore announced; groundbreaking ceremony at Bellary.
• October 2024: Acquisition of tkES India for ₹4,051 crore; Nashik plant added to JV portfolio.
• 2027: Initially targeted for Bellary facility full-scale production; after expansion, higher capacities expected by fiscal 2028.

Integration and Technology Leverage

• Nashik plant now forms the core existing production base, with upscaling to 250,000 tpa.
• Bellary greenfield plant to be built and expanded to 100,000 tpa.
• Both plants to operate under JSW JFE Electrical Steel Pvt. Ltd., ensuring cohesive strategy, shared technology, and unified sales channels.

5. Synergies & Alignment with Broader Strategy

JSW Steel’s Growth Path

JSW Steel is rapidly scaling all its major plants: Vijayanagar, Dolvi, Bhushan Power & Steel, and downstream capabilities. The electrical steel JV aligns with its ambition to tap high-value, energy-efficient steel segments and meet India’s capacity expansion goals of 38.5 million tonnes by FY 25.

JFE Steel’s Global Expansion

While JFE reported a sharp 74% decline in Q1 2025 profit (due to lower volumes and forex pressure), the company reaffirmed its full-year target. The India investment allows JFE to hedge domestic weakness in Japan and accelerate growth in high-potential overseas markets, especially in energy-grade steel.

6. Financial Impacts & Economic Significance

• Equity commitment: ₹19.66 billion from each partner.
• Total project cost: ₹58.45 billion.
• Acquisition cost: ₹4,051 crore for Nashik plant (part of earlier ₹5,500 crore).
• Expected CapEx for Nashik expansion alone: ₹43 billion.
• Bellary expansion: ₹15.45 billion.

Overall, this sizeable infusion of capital is expected to significantly enhance JSW’s value-added steel revenue profile, reducing leverage through higher margins and diversifying capacity beyond standard long products into specialized steel domains.

7. Broader Implications

1. Energy Transition: As India moves toward renewable energy and smart grids, local CRGO supply will critically support domestic grid upgrades, minimising dependent imports.
2. Industrial Ecosystem: The Bellary facility is expected to spur local employment, supplier development, and regional industrial activity in Karnataka.
3. Global Export Potential: With capacity of 350,000 tpa of high‑grade GOES, JSW‑JFE may eventually serve global transformer and motor manufacturers seeking “Make in India” components.
4. Sustainability Focus: CRGO steel contributes to efficiency in electricity transmission, reducing transmission losses—and in the long term, lowering carbon footprint.

8. Challenges & Forward Risks

• Project execution: Large-scale expansions often face delays, cost overruns, or regulatory hurdles—particularly integrating acquisition and new plant timelines.
• Market dynamics: GOES demand may fluctuate due to changing infrastructure plans or macroeconomic slowdowns.
• Competition: Global competitors like ArcelorMittal, Nippon Steel, and German producers may ramp up exports to India, requiring JSW‑JFE to maintain cost efficiency.

9. Takeaway

JSW Steel and JFE Steel’s ₹5,845 crore investment marks a defining moment in India’s high-grade steel journey. Through a combination of acquisition (tkES India) and greenfield expansion (Bellary), the JV is positioned to deliver 350,000 tpa of CRGO steel by fiscal 2028, meeting surging domestic demand, supporting ambition for import substitution, and enabling India to emerge as a manufacturing hub for energy-grade steel.

This move is more than a capacity expansion—it’s a strategic bet on technology, localisation, and India’s energy infrastructure transformation. As renewable energy, EVs, industrial modernization, and smart grid development accelerate, the importance of sector‑specific steel supply chains will only grow. JSW JFE’s initiative aligns squarely with that future.

Key Dates at a Glance

Broader Reflections

• For India, this JV is a bold stride in securing energy-critical infrastructure materials.
• For JSW, it elevates its profile beyond commodity steel to value-added, technology-intensive products.
• For JFE, it offers geographic diversification, new markets, and access to strong demand potentials in one of the world’s fastest-growing economies.
• And for transformers, motors, and renewable tech manufacturers, it promises secure, local, high-efficiency steel supply.