India Targets 25% Emission Cut in Steel Sector; Plans Capacity Expansion to 400 MT

India is preparing to reshape its steel industry through a dual strategy of reducing carbon emissions and significantly increasing production capacity, as per Reuters report.  

The proposed National Steel Policy 2025 outlines a long-term roadmap aimed at aligning industrial growth with sustainability goals. 

Emission Reduction Targets and Strategy 

Under the draft policy, India aims to bring down emissions from steel production to 2 metric tonnes of carbon dioxide per tonne of finished steel by 2035-36.  

This marks a reduction of roughly 25% from current levels of about 2.65 tonnes per tonne, which are around 32% higher than the global average of 2 tonnes. 

The steel sector currently contributes approximately 10–12% of India’s total emissions, making decarbonisation a critical priority.  

The policy proposes measures such as increasing the use of steel scrap, promoting gas-based steelmaking and introducing incentives to support continuous emission reduction. It also highlights the need for collaboration with the oil ministry to secure overseas gas supplies and partnerships. 

At present, infrastructure limitations remain a challenge, with only 21% of blast furnace capacity and 5% of direct reduced iron capacity connected to gas pipeline networks. The document notes that as capacity expands, reducing emissions will be essential for meeting India’s net-zero target by 2070. 

Capacity Expansion and Economic Impact 

Alongside sustainability efforts, India plans to significantly scale up its steel production capacity. The target is to increase crude steel capacity to 400 million tonnes by 2035-36, compared to the current output of around 168 million tonnes.  

The country also aims to more than double steel exports to 20 million tonnes over the same period.

This expansion is expected to drive economic growth and employment. The steel sector currently employs about 2.8 million people and contributes around 2.5% to India’s nearly $4 trillion economy.  

Achieving the targeted capacity would require investments of approximately ₹17 trillion, or $183.41 billion, and could generate over 3 million additional jobs by 2035-36. 

Global Pressures and Supply Chain Adjustments 

India’s push towards cleaner steel production also comes in response to global trade developments.  

The European Union has introduced carbon border tariffs on imports of high-emission products such as steel and cement, prompting India to explore alternative export markets.

The policy also aims to reduce reliance on imported coking coal, lowering dependence from about 90% currently to 80% by 2035-36. 

To support this transition, India has identified 19 countries, including Australia, Russia, Japan, Germany and the United States, for potential collaboration. 

Read More: India’s CBDC Transactions Surpass 150 Million, Total Value Above ₹34,000 Crore! 

Conclusion 

With a combined focus on emission reduction and production growth, India’s proposed steel policy seeks to balance environmental commitments with industrial expansion, positioning the sector for long-term sustainability and global competitiveness. 

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