NextFin News - India is preparing to overhaul its industrial backbone with a dual-track strategy that seeks to double its steelmaking capacity while slashing carbon emissions by 25% over the next decade. According to a government document detailing the "National Steel Policy 2025" reported by Reuters, the world’s second-largest steel producer aims to lower emissions to 2 metric tons of carbon dioxide per ton of crude steel produced by 2035-36, down from the current average of approximately 2.5 tons.
The ambitious roadmap arrives as U.S. President Trump’s administration continues to reshape global trade dynamics, placing renewed pressure on emerging markets to balance industrial expansion with environmental standards that affect export competitiveness. For India, the challenge is structural: the country is attempting to scale its annual steel capacity to 300 million tons to fuel domestic infrastructure growth while simultaneously pivoting away from the coal-heavy blast furnaces that currently dominate its landscape.
Central to this transition is a shift toward cleaner technologies, including green hydrogen and electric arc furnaces. The document indicates that the government will incentivize mills to adopt scrap-based steelmaking and increase the use of renewable energy in the production process. This move is not merely environmental but defensive. With the European Union’s Carbon Border Adjustment Mechanism (CBAM) looming, Indian steelmakers like Tata Steel and JSW Steel face significant levies on their exports if they fail to decarbonize, making the 25% reduction target a prerequisite for maintaining global market share.
However, the feasibility of these targets remains a point of contention among industry analysts. While the government’s vision is clear, the capital expenditure required for such a massive technological pivot is estimated to run into tens of billions of dollars. Some sector experts argue that doubling capacity while cutting emissions intensity is a "technological tightrope walk" that may rely too heavily on the commercial viability of green hydrogen, which has yet to reach scale in the subcontinent. Skeptics point out that India’s reliance on coking coal is unlikely to vanish overnight, given the existing investment in blast furnace infrastructure.
The market response has been cautiously optimistic, reflected in the steady performance of major domestic steel stocks following the report. Investors are weighing the long-term benefits of a modernized, export-ready industry against the immediate margin pressures of transitioning to more expensive energy sources. The success of the National Steel Policy 2025 will ultimately depend on the government’s ability to provide the necessary fiscal support and infrastructure to make green steel more than just a policy aspiration.
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