India is preparing a sweeping overhaul of its steel sector strategy, simultaneously targeting one of the world’s largest industrial capacity expansions and a significant reduction in carbon intensity, reflecting both economic ambition and growing pressure from international trade partners.

Under the proposed National Steel Policy 2025, the government is targeting crude steel capacity of 400 million tons by 2035 and 2036, up from approximately 168 million tons currently, while aiming to more than double steel exports to 20 million tons. The expansion is estimated to require capital investment of around $183.41 billion and could generate over 3 million additional jobs.

On emissions, the policy targets a reduction in carbon intensity from approximately 2.65 metric tons of CO2 per ton of finished steel to 2 tons by 2035 and 2036, bringing India in line with the global average. Steel production currently accounts for 10 to 12% of India’s total national emissions.

To achieve these reductions, the policy proposes accelerating gas-based steelmaking, expanding scrap utilization, and introducing incentives for continuous emissions improvement, while also reducing coking coal import dependence from around 90% to 80%.

The policy responds directly to the EU’s Carbon Border Adjustment Mechanism, which began levying fees on high-emission steel imports from January of this year, prompting producers to accelerate their decarbonization efforts to protect access to key export markets.