INDIA’S DECARBONISATION GAMBLE

In a world where trade wars are fought on carbon intensity, India’s steel industry must transform not just to grow—but to survive

- Charudutta Panigrahi

India’s steel industry is poised for exponential growth, targeting 300 million tonnes of production by 2030. Yet this ambition collides with a stark reality: coal-heavy technologies drive emissions of 2.6 tons of CO per ton of crude steel, far above the global average of 1.92. With steel accounting for 12% of India’s total greenhouse gas emissions, decarbonisation is no longer a choice—it is a strategic necessity.

The sector is at the crossroads, and India’s decarbonisation imperative is unfolding in the middle of an unimaginably shifting global trade order.

Prime Minister Modi has repeatedly expressed confidence that steel will remain the “skeleton of modern economies,” powering skyscrapers, highways, shipping, and industrial corridors. His optimism underscores the sector’s centrality to India’s growth story. For this confidence to translate into global competitiveness, India must urgently accelerate its clean energy transition.

India’s per capita steel consumption, currently 98kg, is projected to rise to 160kg by 2030. This expansion underpins industrial maturity, urbanisation, and economic progress. Steel contributes nearly 3% to GDP and sustains a million livelihoods. Yet growth without sustainability risks exclusion from the very markets India seeks to penetrate. In today’s trade regime, carbon is currency—and India must earn to spend wisely. Recent trade developments underscore the urgency of India’s steel transition:

EU-India FTA: The landmark agreement opens unprecedented market access, covering 99% of exports by trade value. But Europe’s Carbon Border Adjustment Mechanism (CBAM) will penalize high-emission steel. Indian producers must align with EU benchmarks or face tariffs that erode competitiveness. The FTA is both an opportunity and a warning: access is conditional on decarbonisation.