A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) highlights a widening gap between the headline climate commitments made by India’s major steel companies and their actual progress in building the operational, technological, and financial infrastructure required to meet their decarbonisation ambitions. This gap risks locking in emissions-intensive technologies for decades, slowing progress towards net zero and undermining the sector’s long-term competitiveness.
The report adds that the sector faces a critical timeframe over the next decade, in which decisions by companies, investors and government will determine the prospects for steel decarbonisation in India.
“India’s steel industry stands at a crossroads,” says Dr. Saurabh Trivedi, Lead Specialist, Sustainable Finance and Carbon Markets – South Asia at IEEFA. “India is the world’s second-largest steel producer, but while demand has plateaued or is declining among other major steel-producing regions, in India the sector is on a steep growth curve. Therefore, the choices Indian companies make in the next few years will have profound implications for global steel sector emissions trajectories through mid-century.”
The analysts evaluated the decarbonisation readiness of a sample of ten steel producers — seven Indian and three global peers — assessing the connection between their stated emission reduction targets and their actions in terms of strategic planning, operational capabilities, and financial alignment. The Indian companies assessed include JSW Steel, Tata Steel, Steel Authority of India Ltd (SAIL), Jindal Steel, Rashtriya Ispat Nigam Ltd (RINL), Jindal Stainless Ltd, and Godawari Power and Ispat Ltd (GPIL), while the global companies are ArcelorMittal, POSCO, and Nippon Steel.
The findings indicate that climate ambition has outpaced implementation. Five of the seven Indian companies have adopted Paris-aligned net-zero targets for 2050, but they scored comparatively poorly across the five key parameters assessed. In addition, emissions intensity for most Indian steel companies has worsened over the last three years, at a time when global peers have achieved reductions.
Progress is slowest in financial alignment. From a sample of seven Indian steel producers and three global peers, no company scored above 43%, indicating that capital allocation and alignment decisions across the sector have not kept up with stated climate strategies.
“Companies have set targets, and technology planning is advancing among the leaders, but capital allocation has not moved,” says Soni Tiwari, Energy Finance Analyst – South Asia at IEEFA. “Meanwhile, emissions are heading in the wrong direction, and that problem is set to worsen as the sector grows unless technology substitution accelerates.”
Steel companies’ decarbonisation readiness score
A blast furnace (BF) typically operates for 20–25 years, with each relining extending its lifespan by another 15–20 years. In India, around 43 million tonnes per annum (MTPA) of existing BF capacity is due for relining before 2030, which would allow these furnaces to continue operating for an additional 15–20 years.
The report states that extending and expanding these technologies will lock in emissions for decades, undermining decarbonisation targets. This, in turn, will expose Indian companies to tightening international controls such as carbon border adjustments, green procurement mandates, and investor pressure for credible transition plans.
Overcoming these issues will require coordinated government action. The roughly $24 billion (INR 2.25 lakh crore) investments globally in steel decarbonisation to date have been overwhelmingly enabled by public capital, underscoring a basic reality: The economics of green steel do not yet work without substantial public support.
For India, targeted public capital deployment through instruments such as credit guarantee facilities, competitive contracts for difference, and green public procurement mandates will be needed to shift the risk-reward calculus for producers and unlock private investment at scale.
“The window for action is narrowing,” says Tanya Rana, Energy Analyst – South Asia at IEEFA. “The steel sector’s transition will ultimately be determined not by the targets companies announce, but by the investments they make and the assets they build. On that measure, the sector in India has considerable ground to cover.”
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