By H.D. Kumaraswamy
Guided by the visionary leadership of Prime Minister Narendra Modi and his steadfast commitment to achieving net zero emissions by 2070, India is undertaking a transformative journey towards sustainable and resilient industrial growth. This national resolve is shaping policy, investment, and innovation across key sectors, with the iron and steel industry emerging as a central pillar of this transition.
India’s iron and steel sector is at a defining moment in its development journey. As the second largest crude steel producer in the world, with an output of around 152 million tonnes (MT) in FY 2024-25, the sector is fundamental to the country’s economic growth, infrastructure expansion and employment generation. With a target of achieving 300 MT of crude steel capacity by FY 2030–31 under the National Steel Policy 2017 and a longer-term vision of reaching 500 million tonnes by 2047, steel will remain central to India’s industrial and developmental aspirations.
Steel’s co-dependence keeps emissions high
At the same time, steel production is energy intensive and emissions intensive. India’s steel industry continues to rely predominantly on blast furnace and coal-based direct reduced iron production routes that use coal as the primary energy and reducing agent. As a result, the sector contributes nearly 10 to 12% of the country’s total greenhouse gas emissions. Addressing this challenge is not only an environmental imperative to achieve net-zero targeted by 2070 but also a strategic necessity to ensure the competitiveness of Indian steel in an increasingly carbon conscious global economy. The government has begun laying the foundation for a decisive transition towards cleaner steelmaking.
The introduction of the green steel taxonomy marks an important milestone by defining emission intensity benchmarks (less than 2.2 tCO2e/t-fs) and providing a clear framework to identify and reward low emission steel products as ‘green steel’ with 3 to 5 star ratings. This policy clarity can unlock demand for cleaner steel across infrastructure, construction and manufacturing sectors, while encouraging producers to invest in emissions reduction technologies.
In parallel, the ministry has been allocated Rs 455 crore under the National Green Hydrogen Mission to pilot the use of green hydrogen in steel production. This initiative signals a strong commitment to transformative technologies that can reshape steel production pathways in the coming years. Together, these measures reflect a growing recognition that decarbonising steel is integral to India’s broader climate and industrial strategy.
Above measures will accelerate the low carbon steel production, however to achieve Net-Zero for Indian steel industry is also working towards carbon capture, utilization and storage. Against this backdrop, the allocation of Rs 20,000 crore in the Union Budget for piloting carbon capture utilisation and storage technologies across five sectors, including steel, represents a decisive policy intervention. For the steel industry, carbon capture holds exceptional relevance towards complete elimination of emissions, which is so far challenging even with improved energy efficiency and renewable power.
Carbon capture systems offer a direct and effective solution to address these process related emissions. By capturing carbon dioxide from blast furnace and direct reduced iron operations before it is released into the atmosphere, CCUS technologies can deliver substantial emissions reductions while allowing existing plants to continue operating. This makes CCUS a powerful tool for India, where a large base of steelmaking assets will remain in service for decades.
The Rs 20,000 crore allocation can act as a catalyst for accelerating CCUS deployment at scale. Pilot projects supported through this funding can help establish technical standards, build domestic expertise and reduce costs through learning and innovation. They can also create new industrial ecosystems around carbon transport, utilization and storage, generating skilled employment and opening avenues for industrial symbiosis.Steel Exchange of India board approves Rs 700 crore fund raising, credit rating upgraded
CCUS can future-proof steel import
Moreover, early adoption of CCUS can strengthen India’s position in global steel markets that are increasingly shaped by carbon regulations and sustainability requirements. As mechanisms such as carbon border measures gain prominence, steel produced with integrated carbon capture systems will enjoy a competitive advantage, safeguarding exports and attracting climate aligned investments.
For CCUS to realise its full potential, coordinated action will be essential. Industry initiatives for long term carbon storage, development of shared infrastructure and integration with renewable energy systems will be critical. Public private partnerships can play a central role in scaling up projects, while robust monitoring and verification frameworks can ensure environmental integrity.
India’s steel ambitions are inseparable from its climate commitments. By placing carbon capture utilization and storage at the heart of its decarbonisation strategy, alongside other clean technologies, India has an opportunity to demonstrate that industrial growth and climate responsibility can advance together. The current budgetary push for CCUS could well define the future of Indian steel, transforming it into a pillar of sustainable and resilient development.
(The author is Union minister of heavy industries and steel )
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.