India’s Ministry of Steel has formally requested an allocation of ₹150,000 million (₹15,000 crore / ~US $1.74 billion) in the FY26 Union Budget to drive decarbonisation across the steel sector. The proposal-if approved by the Cabinet-will span up to 2030, offering incentives for emissions reduction, enhanced research and development, improved raw-material efficiency, and promoting renewable energy for steelmakers.
Finance Minister Nirmala Sitharaman is expected to present the Budget on February 1, 2025, with the ministry’s request reflecting India’s strategic alignment with its 2070 net-zero emissions pledge under Prime Minister Modi.
Under the proposed green steel framework, steel produced with carbon emissions below 2.2 tCO₂ per tonne will be classified as “green,” mirroring India’s Green Steel Taxonomy, launched in December 2024. In contrast, current average emissions amount to 2.55 tCO₂/t, significantly higher than the global average of 1.85 t.
The Steel Ministry also proposes directing banks to offer lower interest rates for renewable energy loans to steel companies, further incentivising the switch to cleaner production processes. Additionally, there is discussion about mandating government procurement of green steel for public infrastructure, ensuring sustained demand for eco-friendly products.
While the finance ministry has expressed caution-highlighting high green hydrogen costs and inflationary risks-inter-ministerial deliberations continue, balancing economic stability with climate action.
This Budget proposal marks a landmark shift in India’s industrial policy, signaling a stronger role for transition finance and public backing in the steel sector’s decarbonisation journey. If approved, it could accelerate emission reductions, foster innovation, and enable India to become a competitive player in the emerging global market for green steel.
