India is currently the world’s second-largest steel producer and has articulated a long-term vision of achieving 300 MTPA crude steel capacity by 2030. With strong infrastructure push, urbanisation, manufacturing expansion, and renewable energy investments, domestic demand remains robust. Crude steel production has risen by 11.7% during April-October FY 2025-26 compared to last year and Finished steel production also increased by 10.8% during this period. Despite the strong potential, the sector faces structural challenges that limit the potential to grow efficiently and sustainably. Green Steel production is low due to the following:

Limited raw material for green steel production

Scrap is one the most critical RM for EAF and also to drive the decarbonisation agenda. Despite the National Steel Policy projecting >30% of steel getting produced through Scrap usage, the current levels are significantly low due to heavy reliance on scrap imports, fragmented domestic collection infrastructure, no formal recycling sector and quality inconsistency in most scrap collected. A parliamentary committee explicitly called out lack of a centralised scrap database and recommended a portal and nodal mechanism to track generation, use, imports/exports. Similarly, Hydrogen too is the long-term decarbonisation lever. Global industrial scale viability requires <$ 2/kg green hydrogen while India is in excess of $4. Infrastructure gaps also exist with absence of hydrogen pipelines, storage, and delivery systems. Accentuating the problem is the knowledge and capability deficits across H₂ DRI operations, logistics, and furnace integration.

Recommendation:

Scrap

• Digitize the entire scrap ecosystem under National Scrap Registry & Tracking. Establish national scrap grading standards, mandate testing and certification protocols and implement digital traceability from scrap origin to furnace.
• Incentivize end-of-life vehicles, formalize dismantling, assist the industry in steel recovery optimization. There exists a potential to unlock ~11 MMT/year of scrap during 2036–2041.
• Institutionalise the construction scrap recovery, mandate industrial scrap circularity and collaborate with academia and industry to introduce smart demolition standards. Boosting Domestic Scrap Generation – Enforce mandatory deconstruction norms and audits in construction and infrastructure with ~410 MMT steel consumed in last 5 years represents a future scrap reservoir.

Hydrogen

• Enable financial bridging via Contracts for Difference (CfD), modelled on Germany’s H2Global mechanism to derisk green hydrogen price differentials for early adopters.
• Develop Green Hydrogen Hubs, co-located with major steel clusters with shared electrolysers, storage, and pipeline infrastructure.
• Scale domestic electrolyser manufacturing with R&D grants and temporary import duty rationalisation until domestic scale is achieved.

Energy transition & decarbonisation

In India, steel contributes ~12% of India’s industrial CO₂ emissions, as the processes are heavily reliant on the traditional BF-BOF method. Green transition requires high capital outlay, and the economic viability through hydrogen and other alternate fuels is low. While, green steel production emits 82%–97% less carbon compared to conventional methods, the cost is currently 30%–54% higher. Following steps may be undertaken by government to promote green steel production.

Recommendation:

• Make Carbon Capture, Utilisation and Storage (CCUS) mandatory for medium term emissions reduction from BF BOF routes.
• Enable the sector to achieve up to 90% renewable electricity penetration.
• Introduce carbon pricing of USD 90–100 per ton CO₂ between 2030–2040 to internalise carbon costs and trigger private investment in low carbon technologies.
• Establish a uniform national GHG measurement, reporting and verification (MRV) system, align MRV protocols with EU CBAM requirements, introduce India specific protection mechanisms during transition and phase CBAM exposure gradually, supported by financial assistance and technology upgrade support. Enable reduction in emission intensity from 2.55 tCO₂/ton to 1.20 tCO₂/ton and reserve EU market access for Indian steel exports.
•  Government must provide targeted tax incentives, capital subsidies and Viability Gap Funding (VGF) and direct grants for pilot projects, and first of a kind deployments.

Spending on research & development

Steel Research & Technology Mission of India (SRTMI) is a collaborative platform created by the Ministry of Steel to fund steel-specific research aimed at resolving industry-wide issues such as decarbonisation, with funds up to 60 % of project costs for industry–academia R&D and up to 75 % funding for steel tech startups. Government of India has approved a Research, Development and Innovation (RDI) scheme with an overall corpus of ₹1 lakh crore over six years. This is the largest such R&D funding initiative aimed at boosting private-sector research and innovation. In FY 2025-26 alone, ₹20,000 crore has been allocated from the Budget towards this fund. The RDI is managed through a special purpose fund under the Anusandhan National Research Foundation (ANRF), with funds deployed via second-level fund managers.

Despite the above measures, the spending on R&D is low in India with an overall expenditure of about ~0.65 % of GDP, significantly below the global average of ~2.7 % (South Korea – ~5% and Japan – ~3.5%). This means the absolute funding pool historically has been limited, particularly for long-gestation, capital-intensive technologies of green steel, advanced alloys, and decarbonisation tech. Even Indian private industry spends roughly 0.2 % of GDP on R&D, compared with 2–4 % in advanced economies, a stark contrast that indicates industry under-investment. Firms often view R&D as a cost with uncertain short-term payoffs rather than a strategic investment, slowing growth in steel-sector innovation.

Recommendation:

• Private players can partner with SRTMI to fund projects in, green steel processes, advanced specialty steel alloys and industry-4.0 integration
• Steel firms can propose technology-centric projects to fund managers backed by RDI especially in areas of strategic importance like clean energy integration, decarbonisation pathways and advanced materials with strategic applications (defence, renewables).
• Government could incentivise higher R&D allocation by steel firms, similar to R&D tax incentives in advanced economies. If top 10 steel companies increase R&D intensity from 0.5 % to 1.5 % of revenue over five years, this could unlock ~₹3,000–₹5,000 cr of incremental R&D annually across the sector.
• Establish sector-wide R&D labs funded by government, industry and academia for pre-competitive research in materials science, decarbonisation processes, testing labs for novel alloys, with clear IP & commercialisation frameworks. This would mitigate duplication of individual company investment and accelerates industry wide innovation adoption.
• Combine RDI/SRTMI funding with steel sector schemes (like PLI) so that companies developing new clean steel technology can get production incentives, technology funding and deployment support concurrently.

India’s steel sector is positioned for structural growth driven by infrastructure expansion and manufacturing led development. To realise the 300 MTPA ambition sustainably, coordinated action is required, with a structured policy roadmap with defined milestones, that can enable the sector to emerge as a globally competitive and environmentally responsible steel producer.

India needs a single forum to turn coordinated action into outcomes under a shared vision. Bharat Steel ‘26 is that forum: it is built to align policy and standards, unlock investment and technology partnerships, and harmonise MRV-catalysing execution toward India’s 2030 steel goals while bolstering resilience to CBAM era global pressures. Bharat Steel 2026 will be a lighthouse moment, affirming steel as the backbone of Viksit Bharat 2047.

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