India’s steel industry sits at the sharpest end of the industrial decarbonisation challenge. It is a Designated Consumer under the PAT Scheme, subject to Renewable Purchase and Consumption Obligations, required to obtain environmental clearance for new capacity, and from 2026 exposed to CBAM levies on every tonne of steel exported to the EU. The Ministry of Steel has publicly acknowledged that CBAM poses a larger risk to the sector than US tariffs — and that is before EU ETS carbon prices rise further.

The core problem is production route. Around 55% of India’s steel is produced via the blast furnace-basic oxygen furnace route, which burns metallurgical coal and generates roughly 2.5 tonnes of CO₂ per tonne of finished steel — well above where the sector needs to be. The Indian government introduced a Green Steel Taxonomy in December 2024, classifying steel with emissions below 2.2 tCO₂/t as green and below 1.6 tCO₂/t as five-star. The gap between current BF-BOF performance and those thresholds is large for most producers, which is why planning the transition now matters.

For a visual overview of all the regulations that apply to steel alongside other sectors, see the Industrial Decarbonisation Policy Map. For India’s broader climate commitments and NDC targets that frame the sector’s long-term direction, see the India Decarbonisation page. To explore all five covered sectors together, visit the Sectors overview.