A widening gap between decarbonization targets announced by Indian companies 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, according to a latest report of the Institute for Energy Economics and Financial Analysis (IEEFA), on Wednesday, April 29.
The report titled Decarbonization Readiness in India’s Steel Sector, said 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.
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 decarbonization in the country, it said.
India’s steel sector is at a critical juncture. The report noted that, while demand growth has plateaued or declined in many major steel-producing economies, India continues to witness strong growth, making its decarbonization 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 report finds 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 decarbonization parameters remains comparatively weak.
It 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.
The IEEFA has expressed concerns over continued reliance on blast furnace (BF) technology. It noted that 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 mt per year blast furnace capacity is due for relining before 2030, potentially extending the use of emissions-intensive infrastructure well into the 2040s.
The IEEFA has 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.
To bridge the implementation gap, the 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 risks for producers and unlock large-scale private investment.