Steel ambitions

2047 goals must balance capacity expansion with clean tech

The draft “National Steel Policy: Vision 2047” sets out an ambitious road map for India’s steel industry. It targets an increase in crude steel capacity from about 220 million tonnes (mt) in 2025-26 to 604 mt by 2047, with production projected at 531 mt and finished steel demand at 505 mt. The scale of the proposed expansion reflects the sector’s importance to infrastructure and manufacturing. These projections assume annual gross domestic product (GDP) growth of around 7 per cent and capacity utilisation of 88 per cent. With construction and infrastructure accounting for roughly two-thirds of steel consumption, public investment will remain a key driver of demand. Notably, the policy recognises that technology and material substitution could alter future requirements. Its proposal to review the projections periodically, preferably every five years, must be welcomed.

 

However, raw-material security remains a challenge. Steelmaking inputs account for an estimated 65-70 per cent of costs, and India imports around 92 per cent of its coking coal requirements. The policy seeks to expand domestic mining, improve beneficiation, develop overseas mineral assets and strengthen supply arrangements. These are necessary steps, but the projected expansion also exposes a contradiction. Coking coal requirements are projected to rise from 72 mt to 236 mt by 2047, with the basic oxygen furnace route retaining a 55 per cent share of production. Unless the transition to less carbon-intensive technologies gathers pace, capacity expansion could deepen import dependence and increase emissions. The policy targets a reduction in emissions intensity from 2.54 tonnes of carbon dioxide per tonne of crude steel to 1.54 tonnes by 2047. It proposes greater use of scrap, renewable electricity, hydrogen-based direct reduced iron, and carbon capture, utilisation and storage. Falling renewable-power and storage costs may improve the economics of cleaner steelmaking. Project appraisals must, therefore, compare the full life-cycle costs of competing technologies rather than assume that conventional production will remain the cheapest option.

 

Trade policy must reinforce this transition towards competitiveness. The draft rightly calls for balancing protection against unfair imports with affordable inputs for downstream users. Safeguards may be justified where injury from unfair trade is established, but protection cannot become a substitute for productivity improvements. With the EU Carbon Border Adjustment Mechanism linking market access to embedded emissions, producers must factor carbon costs and cleaner technology into decisions on new plants. More countries are likely to adopt similar measures. Export ambitions also depend on cost competitiveness. India’s steel exports fell from 10.78 mt in 2020-21 to 6.60 mt in 2025-26, while the policy envisages exports of 45 mt by 2047. Achieving that target will require reliable quality, efficient logistics and access to overseas markets.

 

Finally, support for specialty steel, research & development, digitalisation and cleaner technologies should be judged by results. In this regard, it is also worth debating whether steel needs the planned production-linked incentives. Success will come from commercially viable products, better productivity, and the use of modern technology. The real test, therefore, will be whether the industry can expand while lowering costs, reducing emissions, and moving up the value chain.