India’s Bold ₹15,000 Crore Green Steel Budget Proposal
India’s Ministry of Steel is gearing up to launch an ambitious ₹15,000 crore Green Steel Mission as part of its budget proposals for the upcoming fiscal year. The initiative is poised to revolutionise the country’s steel industry by incentivising low-carbon steel production and promoting a greener, more sustainable future. In a significant move, the Ministry is looking to create a policy framework that not only incentivises the shift to green steel but also ensures its widespread adoption through government mandates.
The proposed Green Steel Mission is focused on pushing the steel sector towards adopting cleaner technologies, with a special emphasis on reducing carbon emissions during production. Green steel is defined by its emission levels, which are capped at 2.2 tonnes of CO2 per tonne of finished steel. In India’s green steel taxonomy, the steel is rated across three levels – three stars (2.0 to 2.2 tCO2e/tfs), four stars (1.6 to 2.0 tCO2e/tfs), and five stars (below 1.6 tCO2e/tfs). The mission envisions the implementation of a Production Linked Incentive (PLI) scheme for green steel producers, alongside additional incentives aimed at promoting the use of renewable energy and assisting smaller producers in transitioning to low-carbon steel production methods.
In an effort to stimulate demand, the government is also considering introducing a mandatory procurement policy, targeting up to 37-40 percent of government steel procurement to be sourced from green steel. This could potentially create a substantial market for low-carbon steel within public infrastructure projects, including those funded by central and state governments, Public Sector Undertakings (PSUs), and other government-backed projects. The Green Steel Mission will focus on promoting technological innovation and enhancing domestic production capacity while protecting the Indian steel industry from unfair trade practices. The Ministry has also advocated for stringent safeguard measures to counter the influx of substandard steel and prevent dumping from cheaper international markets.
Additionally, as part of its long-term vision, the Ministry plans to ramp up international collaborations for clean technology transfer, explore new export markets, and diversify raw material sources, especially tapping into international coking coal supplies and securing investments in coal assets, notably in Mozambique. Despite the promise of a greener future, the capital expenditures required to set up green steel plants are significant. Establishing a green steel plant costs nearly double that of a conventional steel plant using electric arc furnaces or blast furnaces, potentially putting pressure on the financial viability of such ventures. To address this, industry players have underscored the need for government incentives to ensure the sustainability of green steel production and the mandatory procurement of such costlier products. The Green Steel Mission represents a bold step towards reducing the environmental impact of India’s steel industry, while ensuring that the country remains competitive in an increasingly eco-conscious global market.
