India’s steel industry accelerates growth while embracing decarbonisation

India’s steel industry is becoming one of the clearest examples of how industrial expansion and decarbonisation are beginning to move in parallel. The sector has grown into a central pillar of infrastructure, manufacturing and construction, while also coming under pressure to cut emissions, reduce import reliance and strengthen domestic capability in higher-value grades.

India is now the world’s second-largest producer of crude steel and, according to Statista’s data on output volumes, has held that position as production has expanded steadily over the past decade. The country also overtook Japan in steel production in FY2019, underlining the scale of its industrial rise. On the demand side, consumption has risen sharply as roads, railways, housing, commercial construction and manufacturing capacity have all expanded.

That demand profile matters. Data cited in the materials shows that construction and infrastructure account for the largest share of steel use, followed by engineering, packaging and automobiles. In other words, steel is not just an industrial commodity: it is embedded in the country’s broader development model.

Production trends also point to a sector gaining depth. Statista’s figures show that crude steel output in India rose sharply between 2020 and 2024, with private-sector mills accounting for the bulk of production and public-sector companies contributing a significant share as well. Finished steel production likewise crossed the 100 million tonne mark in FY2024, reflecting the industry’s ability to translate capacity growth into actual supply.

The government has tried to accelerate that shift through policy support. The Production Linked Incentive scheme for specialty steel, launched in 2021, is intended to nudge manufacturers towards higher-value products and reduce dependence on imports in segments where India still lacks scale. The Ministry of Steel has also backed measures such as the Domestically Manufactured Iron and Steel Products policy, the “Melt and Pour” rule and quality controls aimed at keeping substandard imports out of the market.

These interventions sit alongside a wider industrial strategy. The National Steel Policy aims to lift crude steel capacity to 300 million tonnes a year by 2030-31 and reduce reliance on imported coking coal, which remains one of the sector’s biggest structural vulnerabilities. India still sources the vast majority of its coking coal from abroad, exposing producers to freight disruptions and price swings that can quickly feed into margins.

Logistics is another constraint. Steel is bulky, energy-intensive to move and highly sensitive to transport costs, so weak rail, road and port connectivity can erode competitiveness. The government’s use of the PM GatiShakti platform to map steel units and improve planning is designed to address some of those bottlenecks, but infrastructure gaps remain a recurring concern for producers.

The decarbonisation challenge is becoming more urgent. Steel remains one of the hardest industrial sectors to abate because most existing processes are carbon intensive and heavily dependent on coal. India’s introduction of a Green Steel Taxonomy in 2024 was therefore a notable step, giving the country an early framework for defining and classifying lower-emission steel. The push is now extending to green hydrogen, greater scrap use, renewable energy integration and carbon capture, utilisation and storage.

Budgetary support has followed that logic. The Union Budget 2026-27 set aside ₹20,000 crore over five years for CCUS technologies across steel and other industries, signalling that the transition to cleaner production is now being treated as a strategic industrial issue rather than a purely environmental one.

There are still clear gaps between ambition and reality. India remains dependent on imports for several categories of specialty steel, technology modernisation is uneven across smaller plants and low-cost foreign supply continues to pressure domestic producers. Yet the direction of travel is encouraging: production is rising, exports are improving and the policy framework is increasingly geared towards both self-reliance and low-carbon growth.

For industrial decarbonisation professionals, India’s steel story is therefore less about one grand transformation than about multiple transitions happening at once: capacity build-out, import substitution, supply-chain strengthening and emissions reduction. If those strands can be aligned, the sector could become not only a larger part of the economy, but a more resilient and sustainable one.