India is contemplating a range of incentives, including concessional finance and long-term loans, to support steel manufacturers as the country gears up for a green transition in steel production. The move aims to address challenges posed by carbon taxation, including Europe’s Carbon Border Adjustment Mechanism (CBAM).
Recommendations from 13 dedicated task forces, established to examine measures for decarbonizing the domestic steel sector, will soon be consolidated into an integrated document for stakeholder consultations. The document will not only encompass policy prescriptions but also propose investment incentives like concessional finance and long-term loans. Measures will be implemented to ensure a level playing field among domestic steel producers, with a focus on achieving a consensus on the definition of ‘green steel.’
The Ministry of Steel initiated 13 task forces in 2023, involving industry representatives, academia, think tanks, science and technology bodies, various ministries, and other stakeholders, to discuss and recommend decarbonization measures for the steel sector.
The European Union’s Green Deal 2050 includes the proposed implementation of CBAM for products such as steel and aluminium. CBAM would impose carbon emission costs on imported products equivalent to those under the EU system, potentially impacting exports to the EU and prompting a realignment of value chains.
The steel ministry has highlighted the importance of understanding the impact of CBAM across the value chain and acknowledged the potential severity of its consequences for the sector. Notably, Italy, Belgium, Spain, and the UK are among the top 10 export destinations for Indian steel, with these countries alone accounting for ₹14,090.92 crore worth of exports in the first six months of the current fiscal year. The government aims to achieve a steel production capacity of 300 million MTPA by 2030.