Steel Ministry Approves ₹5,000 Crore Incentive Plan for Low-Emission Production

The Ministry of Steel has given internal approval to a ₹5,000 crore incentive plan to support lower-emission steel production. The scheme is expected to be rolled out within the next few months.

Around 75-80% of the total funds will be directed towards the secondary steel sector. This sector includes nearly 2,200 units, producing about 47% of India’s steel. These units generally lack the financial resources to shift to cleaner technologies, unlike larger integrated producers.

Incentive Model

The initiative will not provide upfront subsidies for capital expenditure. Instead, companies will receive incentives depending on the reduction in emissions compared with their previous year’s performance. Reports suggest that this approach was chosen because tracking the use of subsidies across thousands of small producers is difficult.

Link to National Mission

The ₹5,000 crore scheme is being considered under the proposed National Mission for Sustainable Steel. The mission is intended to encourage the use of alternative materials and technologies that can lower carbon output in steelmaking.

Industry Challenges

India’s steel industry is one of the largest contributors to industrial carbon emissions. It is also facing external pressures from global trade policies. As per the reports, the European Union’s Carbon Border Adjustment Mechanism (CBAM), which connects import tariffs to carbon intensity, is expected to have an impact on Indian exports once implemented.

Broader Commitments

India has pledged to meet targets set under the Paris Agreement and is aiming to achieve net-zero emissions in the future. Reducing emissions in heavy industries such as steel will be an important part of meeting these goals.

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Conclusion

The new scheme focuses on performance-based incentives rather than subsidies. Its main priority is the secondary steel sector, which produces almost half of India’s steel but has limited means to invest in emission-reducing technologies.

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