India pumps in Rs 5,000 crore to decarbonise steel industry

The Government of India has rolled out the National Mission of Sustainable Steel, a Rs 5,000 crore ($570 million) programme aimed at cutting carbon emissions in one of the country’s most energy-intensive sectors. Nearly 80% of the funds will support small and medium-sized producers, who face the greatest hurdles in adopting cleaner technologies.

The initiative is a crucial step toward India’s climate pledges—reducing emissions this decade and reaching net zero by 2070. The steel sector currently accounts for 12% of India’s greenhouse gas emissions, with an emission intensity of 2.55 tonnes of CO₂ per tonne of crude steel, higher than the global average of 1.9 tonnes. To drive change, the government has formally defined categories of ‘green steel’ based on emission intensity, encouraging producers to transition to cleaner methods.

Key strategies include scaling up Electric Arc Furnaces (EAFs), which generate fewer emissions compared to traditional coal-fired blast furnaces. However, challenges remain such as high costs of green technologies, dependence on coal, and a limited scrap market for EAF adoption. Policy incentives, regulatory support, and investment will be critical for industry-wide transformation.

India’s steel consumption is rising sharply, projected to reach 225–240 million tonnes by 2030, requiring capacity expansion to about 300 million tonnes. With per capita consumption already crossing 100 kg, demand is set to grow. At the same time, exports face headwinds due to international measures like the EU’s Carbon Border Adjustment Mechanism (CBAM), which penalises high-carbon imports.

The mission reflects both environmental urgency and trade pragmatism. By promoting cleaner steelmaking, India aims not only to cut emissions but also to safeguard global competitiveness. A recent study by CSEP and the IMF Task Force estimated India needs $467 billion in climate finance by 2030 to decarbonise high-emitting sectors—underscoring the scale of the challenge.

Recently, Global Energy Monitor (GEM) stated that decarbonisation of global iron and steel industry, which is one of the world’s most polluting industries, will depend on whether India pursues cleaner production methods. At the beginning of this year, the Ministry of Steel promised a ‘Green Steel Mission’ for helping the Steel Industry to reduce carbon emission with a support of Rs 15000 crore.

In line of this, the Steel Authority of India Limited (SAIL), the country’s largest public sector steel producer and a Maharatna company, has signed an MoU with John Cockerill India Limited (JCIL) to leverage the combined expertise and technological strengths of both organizations to revolutionize steel production with an emphasis on sustainability and efficiency.