India is set to witness a remarkable rise in demand for green steel, projected to reach 4.49 million mt by fiscal year 2029-30, according to a recent report by strategic consulting company EY-Parthenon titled “Unlocking Green Steel Demand: An Assessment of India’s Automotive, Infrastructure and Construction Sectors”. The growth will be driven primarily by the construction, infrastructure, and automobile industries.
Currently, green steel consumption in India is almost negligible. However, the report predicts a sharp increase in the coming years as the country moves towards decarbonization in key sectors.
Sector-wise breakdown
By 2029-30, green steel demand in India is expected to reach 2.52 million mt from the construction sector, 1.5 million mt from infrastructure, and 480,000 mt from the automotive industry. To meet this projected demand, India will need to scale up the use of green hydrogen-based direct reduced iron (DRI) technology, along with sustainable steelmaking methods such as electric arc furnaces and molten oxide electrolysis.
By FY 2034-35, demand is expected to hit 24.89 million mt, and more than triple to 73.44 million mt by 2039-40. This growth will be largely supported by India’s green transition in infrastructure development and automotive manufacturing.
Green steel comes at a price, but it’s falling
Currently, the price premium on green steel produced via hydrogen-based DRI is around $210 per mt, which adds 3.7 percent to construction project costs, 5.2 percent to infrastructure costs, 4.1 percent to automotive production costs.
However, this premium is expected to drop drastically as green hydrogen prices fall and technology matures. By 2030, the premium is forecasted to decline to just $7 per mt, reducing cost impacts to below 1 percent across all sectors by 2035-40.
In contrast, traditional blast furnace-basic oxygen furnace (BF-BOF) steel production methods will become costlier due to increasing carbon taxes, further encouraging the shift towards low-emission green steel solutions.