India’s next phase of steel sector expansion could structurally expose the country to nearly $1 trillion in coking coal import costs and around 6 billion tonnes of import dependence over the coming decades if future capacity additions continue to rely on conventional blast furnace routes.
The findings come at a time when India is rapidly scaling up steelmaking capacity to support infrastructure growth, manufacturing and urbanisation, while simultaneously trying to reduce import dependence, strengthen industrial competitiveness and shield the economy from global commodity price volatility and currency shocks.
India is expected to roughly double steelmaking capacity over the next decade. According to a study released by the India Energy and Climate Center (IECC) at the University of California, Berkeley, if much of the expansion follows the conventional coking coal-based blast furnace route, India could lock itself into nearly 6 billion tonnes of coking coal imports over a 40-year period, translating into import costs of around $1 trillion.
The report said green steel powered by renewable energy and green hydrogen offers an alternative pathway that can reduce import dependence, improve resilience against global fuel and currency shocks and strengthen India’s export competitiveness as major markets increasingly shift towards lower-emission industrial products.
“India is at a strategic decision point in steel,” said Neelima Jain.
“If future capacity is built around imported coking coal, the country would hardwire currency and price volatility risks into one of its most important industrial sectors. Green steel offers an alternative path,” Jain said.
The study projected that India’s low-cost renewable energy resources could enable domestic green hydrogen production at around $3 per kilogram by 2030.
At those hydrogen prices, green steel production costs could decline to nearly $562 per tonne — only around 5-10 per cent higher than conventional steel produced from new plants.
Unlike conventional steel production, which depends heavily on imported coking coal priced in US dollars, green steel production can be anchored through long-term fixed-price renewable electricity contracts denominated in rupees, significantly reducing exposure to fuel price and forex volatility.
Accounting for these differences in cost structure and risk exposure, the report said green steel could achieve cost parity with or even become cheaper than conventional steel production by around 2030.
“A static cost comparison misses the central economic point,” said Jose Dominguez.
“Conventional steel depends on imported coking coal priced in dollars. Green steel can be powered by domestic renewable electricity under long-term rupee contracts. Over time, that makes it far more resilient,” Dominguez said.
The report also said India’s carbon-intensive steel sector could increasingly face pressure from global carbon-linked trade measures, particularly the European Union’s Carbon Border Adjustment Mechanism (CBAM), which already covers steel imports.
“India’s green hydrogen costs are among the lowest globally,” said Nikit Abhyankar.
“India could be one of the few countries where green steel becomes economically viable within this decade, giving domestic producers an edge in export markets,” Abhyankar said.
The study said India now has a narrow window to shape where future steel capacity is built and how it is financed, calling for long-term green steel offtake agreements, credible emissions standards, reliable clean power access and risk-sharing mechanisms to support early commercial projects.
“Green steel will require a similarly deliberate market-creation effort,” said Amol Phadke.