Industry representative body the Associated Chambers of Commerce and Industry India (Assocham) has sought the introduction of targeted incentives for hydrogen-based direct reduction iron (DRI) production and concessional green finance to support the local steel industry’s transition towards low-carbon manufacturing, it said in a memorandum submitted to the government on Monday, January 12.
The industry body said that these incentives should be part of the national budget for 2026-27 to be placed before the Indian Parliament next month.
Assocham has called for incentives to promote waste-heat recovery systems and the establishment of renewable captive power plants, stating that these measures are critical for reducing emissions from steelmaking, noting that decarbonisation presents both challenges and opportunities, and timely policy support could significantly accelerate the shift towards sustainable steel production.
The industry body also advocated incentivising scrap collection and recycling, underlining that strengthening domestic recycling infrastructure through skilling initiatives is essential to reduce India’s dependence on imported raw materials.
Despite India being the world’s second-largest steel producer after China and recording a healthy growth rate of 8-9 percent, the sector faces mounting pressures, Assocham said.
Elevated input costs, a depreciating rupee, and heavy reliance on imported coking coal, owing to negligible domestic mineable reserves, continue to weigh on producers.
The chamber also flagged concerns over iron ore availability, noting that production has remained stagnant and several auctioned mines are yet to commence operations. Rising steel demand and continued exports of iron ore are further tightening domestic supply, pushing up costs for local mills.