Under the proposed National Steel Policy 2025, India aims to reduce carbon emission intensity in its steel sector by approximately 25% by 2035-36, while simultaneously expanding crude steel production capacity from around 168 million tons to 400 million tons.

The policy seeks to lower reliance on imported coking coal by increasing the use of scrap, promoting gas-based steelmaking, and introducing incentives for decarbonization. Currently, about 90% of coking coal demand in India is met through imports, with a target to reduce this figure to 80%.

As the world’s second-largest steel producer, India’s steel industry accounts for approximately 10-12% of the country’s total carbon emissions. With the implementation of the Carbon Border Adjustment Mechanism (CBAM) by the European Union, Indian steel exports are expected to face increasing pressure, prompting the government to accelerate its green transition and industrial upgrading.

However, infrastructure limitations remain significant. Only about 21% of blast furnace capacity and 5% of direct reduced iron (DRI) capacity are currently connected to natural gas pipelines, showing that significant investment will still be needed to support the transformation in the future.