A new report by Institute for Energy Economics and Financial Analysis has warned that a growing disconnect between decarbonisation targets announced by Indian steelmakers and the concrete actions needed to achieve them could lock the sector into carbon-intensive technologies for decades, threatening its net-zero ambitions and long-term global competitiveness.
The report, titled Decarbonisation Readiness in India’s Steel Sector, found that while the Indian steel industry has increasingly aligned its climate commitments with the Paris Agreement, progress on operational readiness, technology deployment, and financial alignment remains significantly behind.
According to the report, the next decade will be a decisive period for India’s steel industry, with strategic decisions by companies, investors, and policymakers expected to determine the pace and success of steel decarbonisation in the country.
Dr. Saurabh Trivedi, Lead Specialist for Sustainable Finance and Carbon Markets – South Asia at IEEFA, said India’s steel sector is at a critical juncture. He noted that while demand growth has plateaued or declined in many major steel-producing economies, India continues to witness strong growth, making its decarbonisation pathway increasingly important for global emissions reduction efforts.
The study evaluated ten steel producers, including seven Indian companies and three international peers, to assess the alignment between their emission reduction commitments and actual implementation across strategic planning, operational capabilities, and financial investments.
The Indian companies assessed include JSW Steel, Tata Steel, Steel Authority of India Limited, Jindal Steel, Rashtriya Ispat Nigam Limited, Jindal Stainless Limited and Godawari Power and Ispat Limited. Global peers included ArcelorMittal, POSCO and Nippon Steel.
The findings showed that climate ambition has outpaced implementation across much of India’s steel sector. While five of the seven Indian companies have adopted Paris-aligned net-zero targets for 2050, their preparedness across five key decarbonisation parameters remains comparatively weak.
The report also found that emissions intensity among most Indian steel producers has worsened over the past three years, at a time when several global competitors have achieved measurable reductions.
Soni Tiwari, Energy Finance Analyst – South Asia at IEEFA, said that while technology planning is progressing among sector leaders, capital deployment remains insufficient. She warned that emissions could rise further as steel production expands unless cleaner technology adoption accelerates.
One of the report’s major concerns is the continued reliance on blast furnace (BF) technology. According to IEEFA, blast furnaces typically operate for 20 to 25 years, and relining can extend their lifespan by another 15 to 20 years. In India, around 43 million tonnes per annum (MTPA) of blast furnace capacity is due for relining before 2030, potentially extending the use of emissions-intensive infrastructure well into the 2040s.
The report cautioned that extending the life of such assets could expose Indian steelmakers to increasing international regulatory pressure, including carbon border adjustment mechanisms, green procurement mandates, and growing investor scrutiny over credible transition planning.
IEEFA noted that global investments in steel decarbonisation have reached around USD 24 billion (INR 2.25 lakh crore), with most projects heavily supported by public funding. The report emphasized that green steel economics remain challenging without substantial government-backed financial support.
To bridge the implementation gap, IEEFA called for stronger policy intervention in India through financial instruments such as credit guarantee facilities, contracts for difference, and green public procurement mandates to reduce risk for producers and unlock large-scale private investment.
Tanya Rana, Energy Analyst – South Asia at IEEFA, said the steel sector’s transition will ultimately depend on investment decisions and asset development rather than headline targets, adding that the industry still has considerable ground to cover in translating ambition into action.
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