India aims to lower steel emissions by 25%, set targets to reduce greenhouse gas emissions from the steel sector (the second-largest producer of steel globally), and increase steel production capacity. This plan will help India reduce costs to deal with international pressures for decarbonization, especially with new trade laws regarding carbon tariffs in Europe, and provide a dual benefit, supporting economic growth as well as aligning with India’s goal to achieve net-zero emissions by 2070.

What Are the Major Targets in India’s New Steel Policy Framework?

• Reduction of emissions: The country targets reducing emission intensity to 2 metric tons of CO2 per ton of finished steel by 2035-36 from its current level of 2.65 tons, which is 32% higher than the global average.
• Expansion in production: Capacity for crude steel production is expected to more than double to 400 million tons from its current level of 168 million tons by 2035-36.
• Target for export expansion: Steel export is expected to more than double to 20 million tons due to the diversified market portfolio against global trading tensions.
• Required investment: Total investment in the sector is required to be around ₹17 trillion ($183 billion), creating above 3 million jobs.

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How Is India Planning to Minimize Emissions in the Steel Industry?

• Transitioning to gas-based steel manufacturing: This policy advocates for the adoption of clean energy sources rather than coal, such as gas-based steel manufacturing, which can decrease emissions by 30% from blast furnaces.
• Steel scrap usage: Scrap steel is highly effective in minimizing emissions; steel scrap-based electric arc furnaces produce up to 75% less CO₂ emissions than conventional steel manufacturing processes.
• Restrictions imposed by infrastructure: At present, only 21% of blast furnaces and 5% of direct reduction iron furnaces have access to pipelines for gas transportation, indicating an important constraint.
• Cutting dependence on coal: India aims to reduce its import of coking coal from 90% to 80% between 2035 and 2036.

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Why Is This Transition Critical for India’s Economy and Climate Goals?

India aims to lower steel emissions by 25%, which is essential for its economy and climate objectives, as the Indian steel industry accounts for 10–12% of all greenhouse gas emissions and significantly contributes to global industrial pollution. As current worldwide climate regulations tighten, such as the European Union’s Carbon Border Adjustment Mechanism, Indian exports will begin facing increasing pricing pressures, making the shift towards cleaner production an important environmental goal and a strategic choice to remain competitive on the global stage.

At the same time, the sector is a key economic driver, contributing 2.5% to India’s nearly $4 trillion economy and employing around 2.8 million people. Expanding existing production capacity to 400 million tons while decarbonizing will require technology development, collaboration with Australia, Japan, or the U.S., and expanding current infrastructure, among other measures, to be critical components of this transition.

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