India is launching a ₹5,000 crore mission to boost green steel production through concessional loans, risk guarantees, and policy incentives. Secondary steelmakers—who contribute nearly half of total output but lag in adopting modern technologies—will be at the core of this effort. Green steel, produced using renewable energy, green hydrogen, and direct reduced iron (DRI) technologies, is expected to play a pivotal role in reducing emissions from a sector that accounts for 10–12% of the country’s emissions.
Green steel demand in the country is projected to surge from the current negligible levels to 179 MT by 2050, led by construction, infrastructure and automobile manufacturing. While costs and green hydrogen pricing pose challenges, procurement mandates and policy incentives can position India as a global leader in sustainable steel.
Image Source: Freepik
The government is formulating a national mission to provide financial assistance to both large and small steelmakers for the production of sustainable or ‘green’ steel. Estimated at around ₹5,000 crore, the scheme could be launched in the next financial year following necessary approvals.
The support package will include concessional loans, risk guarantees, and other financial instruments to help steelmakers transition towards greener practices. While the scheme will primarily target secondary steel producers—who contribute nearly half of India’s total steel output—primary producers using blast furnaces will also be eligible.
Secondary steel producers, who typically rely on scrap and sponge iron and operate electric arc or induction furnaces, are seen as crucial to India’s decarbonisation efforts. While these methods are inherently less carbon-intensive than traditional blast furnaces, adoption of modern, efficient technologies among secondary players remains below 50%, according to the Ministry of Steel.
Integrating this segment into green steel production could have a transformative impact. Their scale means even modest efficiency improvements would deliver significant emission reductions. EAFs and induction furnaces also offer flexibility, making them more compatible with renewable power, green hydrogen, and biochar. Additionally, increased reliance on scrap recycling supports India’s circular economy goals and lowers dependence on imported coking coal, reinforcing both sustainability and energy security objectives.
Green steel refers to steel manufactured with minimal or zero carbon emissions. In contrast to conventional processes that rely heavily on coal and coke—the key drivers of greenhouse gas emissions—green steel is manufactured using cleaner inputs such as green hydrogen, renewable power, and direct reduced iron (DRI) technologies.
The government aims to encourage the adoption of better-quality raw materials, renewable energy, and alternative fuels to cut emissions in steel production. Under the National Steel Policy 2017, India set a target of reducing carbon intensity to 2.6–2.7 tonnes of CO₂ per tonne of crude steel through electric arc furnace technology by 2030. Relying on traditional production methods after 2030 may drive up costs by 4–13%.
At present, about 50–60% of primary producers have shifted to modern technologies.
In parallel, the ministry is preparing a broader Green Steel Mission. This initiative may include a production-linked incentive (PLI) scheme specifically for green steel, incentives to adopt renewable energy, and procurement rules requiring government bodies to source a share of their steel from sustainable producers.
Industry demand forecasts underscore the urgency of these initiatives.
According to a study by EY-Parthenon with WWF-India and CII-GBC, India’s green steel demand is currently negligible. However, by FY2030, the green steel demand is expected to reach 4.49 million tonnes, led by construction at 2.52 million tonnes, infrastructure at 1.5 million tonnes, and the automotive sector at 0.48 million tonnes. This initial growth will be driven by increasing urbanization and a shift toward sustainable building practices. By FY2035, demand is projected to climb to 24.89 million tonnes, more than doubling to 73.44 million tonnes by FY2040, fuelled by the green transition in infrastructure and automotive manufacturing. By FY2050, demand is expected to peak at 179.17 million tonnes, with construction accounting for over half of total consumption.
Source: Media Reports (EY-Parthenon)
For India, the shift to green steel presents a twofold opportunity.
On the domestic front, mandating that at least 25% of public steel procurement come from green sources—as the government is currently considering—would establish a strong baseline demand and accelerate industry-wide adoption. Globally, as trade barriers such as the EU’s Carbon Border Adjustment Mechanism (CBAM) become more stringent, advancing green steel production will help safeguard India’s export markets and strengthen its position as a dependable supplier in the global decarbonisation transition.
These measures support India’s broader decarbonisation drive and its net-zero emissions target for 2070, with the steel sector—responsible for nearly 10–12% of national emissions—emerging as a key focus area. The upcoming mission builds on earlier initiatives, including the December 2024 release of a taxonomy for green steel and a sectoral roadmap for decarbonisation.
Yet, implementation remains challenging. The finance ministry has flagged concerns over the high costs involved—particularly the price of green hydrogen—and possible inflationary pressures.
Consequently, the incentive framework is still under discussion between the Steel and Finance Ministries. At the same time, the government plans to require the use of green-certified steel in all central and centrally-sponsored infrastructure projects from FY 2027–28, underscoring its long-term commitment to sustainable infrastructure.
For India, the world’s second-largest steel producer, advancing green steel is a strategic imperative tied to both competitiveness and climate goals. The planned ₹5,000 crore mission, could lower emissions, strengthen supply chains, and align the sector with the net-zero 2070 vision. With targeted incentives, regulatory backing, and green procurement mandates, secondary steelmakers can become the drivers of this shift, ensuring India’s steel industry not only reduces its carbon footprint but also secures long-term resilience and global market relevance.
What is India’s Green Steel Mission and its funding size?India plans to launch a ₹5,000 crore Green Steel Mission in the next financial year to support both primary and secondary steelmakers in adopting low-carbon green steel technologies
What financial support will be offered to steel producers?The mission will provide concessional loans, risk guarantees, and other financial tools, with a particular focus on secondary steel producers—who account for nearly half of India’s total steel output.
How is green steel defined under India’s policy framework?India introduced its Green Steel Taxonomy in December 2024, defining green steel as steel with emissions below 2.2 tonnes CO₂ per tonne of finished steel. Emission levels below 1.6 tCO₂ per tonne qualify for a five-star green rating.
Are there mandates for using green steel in government projects?Yes. Starting FY 2027–28, the government will mandate a certain percentage of green-rated steel in all central and centrally sponsored infrastructure projects. This requirement is expected to continue for eight years.
What emission reduction targets has the Green Steel Mission set?The mission aims to reduce steel production emissions intensity from 2.65 tonnes CO₂ per tonne (current level) to 2.20 by 2029–30, aligning with India’s broader net-zero by 2070 vision.
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