India's small steel firms face costly hurdles in shifting to low-carbon production
Micro, small and medium-size steelmakers in India, which supply about 40% of the country’s crude steel, are struggling to meet new decarbonisation mandates because of limited capital and high technology costs.
In Chhattisgarh’s Raipur cluster, roughly 316 micro, small and medium-size secondary steel enterprises produce around 800,000 tonnes of sponge iron and steel annually, accounting for a sizable share of India’s output. These firms depend on coal-driven direct reduced iron, which generates 2.7-3.1 tonnes of CO₂ per tonne of steel, well above the 1.92-tonne global average. The Indian government’s shift to carbon-intensity targets and a carbon-credit market slated for 2026-27 adds pressure to cut emissions, yet many producers lack the financial bandwidth for equipment replacement or green hydrogen adoption.
While larger integrated players can invest in waste-heat boilers, continuous casting and solar power, smaller mills cite high capital costs, land constraints and volatile fuel prices as barriers. Support schemes such as concessional finance or credit guarantees have seen low uptake, leaving the sector’s decarbonisation likely to proceed slowly through incremental efficiency gains rather than disruptive technology.
Why it matters
India's steel sector supplies critical infrastructure, and its emissions reduction is key to meeting climate goals while preserving jobs.
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