India weighs carbon capture aid to shield EU steel exports

The Union budget allocated ₹20,000 crore for carbon capture; move to benefit steelmakers

- Dipali Banka & Abhishek Law

Union steel minister H.D. Kumaraswamy said carbon capture in India costs between ₹1,900 and ₹2,400 per tonne of carbon dioxide.

The Centre plans to financially support carbon capture technology for India’s steel sector, betting on it as a practical way to cut emissions while protecting exports from the European Union's (EU) upcoming carbon tax.

The Union budget for fiscal eyar 2027 (FY27) has allocated ₹20,000 crore for carbon capture, a move expected to benefit steelmakers the most. The government is positioning the scheme as a potential safeguard against the EU's Carbon Border Adjustment Mechanism (CBAM), which imposes extra taxes on carbon-intensive imports. CBAM came into effect on 1 January 2026.

In 2025, India exported 8.6 million tonnes of steel, with the European Union accounting for a little over 40% of those shipments, according to commodities market intelligence firm BigMint.

“Carbon capture in India costs between ₹1,900 and ₹2,400 per tonne of carbon dioxide, or about $20 to $26,” H.D. Kumaraswamy, union steel minister, told Mint in an interview. “A policy study shows that at least a 50% government subsidy will be needed to make it commercially viable for steel companies.”