There were several reasons:

1. The new forest laws of the colonial government prevented people from entering the reserved forests. Now it became difficult for the iron smelters to find wood for charcoal. Getting iron ore was also a big problem. Hence, many gave up their craft and looked for other jobs.
2. In some areas the government did grant access to the forest. But the iron smelters had to pay a very high tax to the forest department for every furnace they used. This reduced their income.
3. By the late 19th century iron and steel were being imported from Britain. Ironsmiths in India began using the imported iron to manufacture utensils and implements. This inevitably lowered the demand for iron produced by local smelters. All these reasons caused the decline of the Indian iron smelting industry.