Carbon Tax to Drive Green Steel Exports in India

India’s steel industry is at a turning point with the global shift towards low-carbon manufacturing. Union Minister of New and Renewable Energy Pralhad Joshi has stressed that carbon tax mechanisms, particularly in the European Union (EU), will reshape trade opportunities. At the AIIFA Steelex 2025 event in Mumbai, he urged domestic steelmakers to fast-track Green Steel production to maintain competitiveness in international markets.

Carbon Tax and Export Barriers

Joshi explained that under the EU’s Carbon Border Adjustment Mechanism (CBAM), import tariffs on steel will be linked directly to carbon content. This means only Green Steel producers will enjoy favourable access to overseas markets. He warned that companies slow to adapt risk facing higher export barriers, which could limit India’s role in the global steel supply chain.

India’s Green Steel Production Targets

The Minister set a clear target of producing 300 million tonnes of Green Steel by 2030, with 50 million tonnes earmarked for exports. He highlighted that India’s progress in renewable energy has already impressed EU leaders during their recent visit, creating optimism for stronger trade relations. With upcoming free trade agreements (FTAs) with the EU and Australia, India has an opportunity to position itself as a major supplier of sustainable steel.

Green Hydrogen at the Core of the Transition

Joshi underlined the role of Green Hydrogen in making steel production cleaner. Currently, five pilot projects are active in the sector. Major ports such as Kandla, Paradip, and Tuticorin are being developed into Green Hydrogen hubs to ensure large-scale availability in the near future. Nearly ₹20,000 crore under the National Green Hydrogen Mission has already been allocated, including incentives for 3,000 MW of electrolyser manufacturing capacity.

The government has also taken measures to promote adoption, including extending the interstate transmission system (ISTS) waiver until 2030, exempting Green Hydrogen and Green Ammonia plants from environmental clearance, and creating a single-window clearance system.

Safety, Certification, and Cost Reduction

To boost confidence in the sector, Joshi announced that the government has launched a Green Hydrogen safety panel and is finalising safety measures. He noted that the Green Hydrogen certification scheme introduced in April 2024 is already gaining global acceptance.

On pricing, the Minister stated that the government is working to bring the cost of Green Hydrogen below $2 per kg. Similarly, the price of Green Ammonia has dropped significantly from over ₹100 per kg to ₹49.75 per kg through competitive auctions.

Wider Benefits of Green Hydrogen

The Minister pointed out that India is adding more than 125 GW of capacity for Green Hydrogen projects, which will cut carbon emissions by 50 million tonnes and create six lakh new jobs. He emphasised that this large-scale adoption will not only drive exports but also secure long-term energy and environmental goals for the country.

Read More: Steel ministry clears ₹5,000 cr scheme to boost low-emission operations 

Conclusion

India’s steel sector is facing a decisive shift as global markets demand lower-carbon production. With carbon taxes shaping trade flows, Green Steel will be the only way forward for export competitiveness. Supported by ambitious government targets, significant Green Hydrogen investments, and international trade agreements, India is positioning itself as a leader in sustainable steel production.

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