India is preparing to significantly expand its steel production capacity while simultaneously targeting a 25% reduction in emissions intensity, signalling a dual-track strategy that aligns industrial growth with climate commitments. The roadmap, outlined in a draft national policy, aims to reshape one of the country’s most carbon-intensive sectors as demand for infrastructure and construction materials continues to rise.
Under the proposed framework, India plans to increase crude steel capacity to 400 million tonnes by 2035–36, more than double current levels of around 168 million tonnes. This expansion is closely tied to the country’s infrastructure pipeline, including transport networks, housing, and industrial corridors, all of which depend heavily on steel as a core building material.At the same time, the policy targets a reduction in emissions intensity from approximately 2.65 tonnes of carbon dioxide per tonne of finished steel to about 2 tonnes by 2035–36. This shift is critical given that the steel sector contributes an estimated 10–12% of India’s total emissions, placing it at the centre of the country’s decarbonisation efforts. The strategy focuses on transitioning towards cleaner production methods, including increased use of steel scrap, expansion of gas-based steelmaking, and incentives for continuous emissions reduction. However, infrastructure gaps remain a key constraint. Only a limited share of existing steelmaking capacity currently has access to gas pipeline networks, which could slow the pace of transition in the near term.
For urban development, the implications are significant. Steel is fundamental to building resilient cities, from metro rail systems and highways to high-rise housing and industrial facilities. As demand grows, ensuring that steel production becomes less carbon-intensive will be essential to balancing construction expansion with environmental sustainability.Global trade dynamics are also influencing the policy direction. The introduction of carbon-linked tariffs in international markets, particularly in Europe, is increasing pressure on Indian manufacturers to adopt cleaner production processes. This has prompted a strategic shift towards diversifying export markets while improving the environmental profile of domestic output.The scale of the transformation is substantial. Industry estimates suggest that achieving the targeted capacity expansion will require investments of around ₹17 trillion and could generate more than three million additional jobs over the next decade. This positions the steel sector as both an economic growth engine and a key lever in India’s transition towards a lower-carbon industrial base.At a systemic level, the plan reflects the complexity of managing rapid urbanisation alongside climate obligations. While steel demand is expected to surge with infrastructure growth, reducing its environmental footprint will require coordinated action across policy, technology, and supply chains.
Looking ahead, the success of this strategy will depend on how effectively India bridges the gap between ambition and execution. Expanding capacity while cutting emissions will require not only investment and innovation, but also the development of supporting infrastructure and regulatory frameworks that enable cleaner production at scale—ensuring that future urban growth is both robust and sustainable.
