Sajjan Jindal-led JSW Steel is in advanced discussions to divest up to 50% stake in Bhushan Power & Steel Ltd (BPSL) to its long-time Japanese partner, JFE Steel, in a move aimed at boosting scale, technology integration, and financial efficiency.

The potential deal, sources said, would help expand BPSL’s capacity from 5 million tonnes to 10 million tonnes while easing JSW’s debt burden, which stood at ₹79,153 crore as of September 2025. The talks come amid a pending Supreme Court ruling on the legality of JSW’s earlier ₹19,700 crore acquisition of BPSL, according to a report by Business Standard.

BPSL has the potential to double its capacity from 5 million tonnes to 10 mt, and JFE is seen as a natural partner to drive the expansion, given the long-standing collaboration between the two companies, sources added. In 2010, the Japanese steel major had picked up a 15 per cent equity stake in JSW Steel.

The strategic alliance and technology agreement had enabled JSW Steel to leapfrog the learning curve for the higher end of automotive steel.

More recently, JSW Steel and JFE have deepened their collaboration through joint investments in the electrical steel segment.

In October 2024, JSW Steel announced that it would acquire a 100 per cent stake in thyssenkrupp Electrical Steel India Private Limited (tkES India) jointly with Japan’s JFE Steel Corporation for ₹4,051 crore.

Further, in August this year, JSW Steel and JFE Steel Corporation announced expansion of its manufacturing capacity for grain-oriented electrical steel at a cost of ₹5,845 crore.

Sources said the deal between JSW Steel and JFE for BPSL would likely have been finalised, but a Supreme Court order related to BPSL threw the plans off track, albeit temporarily.

In May 2025, the apex court had declared JSW Steel’s ₹19,700 crore resolution plan for BPSL ‘illegal’ and ordered the latter’s liquidation, four years after the company was acquired by the Indian steel major under the Insolvency and Bankruptcy Code (IBC).