Steel ministry clears ₹5,000 cr scheme to boost low-emission operations

The steel ministry has approved a Rs 5,000 crore scheme to promote low-emission steel, with 80% of funds directed to the secondary sector and incentives linked to emission cuts

The steel ministry has received internal approvals for the Rs 5,000 crore incentive scheme for steelmakers, which will be rolled out soon as part of efforts to help companies decarbonise operations.

 

“We are launching a scheme to help the steel industry, especially the secondary steel sector, to produce low-emission steel,” Sandeep Poundrik, secretary, ministry of steel, said at an industry event.

 

He said up to 80 per cent of the funds will be directed towards the secondary steel sector, which comprises around 2,200 units and contributes 47 per cent of India’s steel output but lacks the financial capacity to invest in clean technologies. Larger producers are expected to mobilise their own resources.

   

“The scheme has received internal approvals and is under formulation. It will be operational in the next few months,” Poundrik said, adding that it would follow a performance-based model, where incentives will be linked to the extent of emission cuts achieved by producers compared with the previous year.

 

He clarified that the scheme would not provide upfront capital subsidies, as monitoring their use across thousands of small producers would be difficult. “In capital expenditure subsidy schemes, it becomes difficult to gauge whether the funds have been used for reducing carbon or increasing capacity,” Poundrik said.

 

The steel sector in India faces pressure from the European Union’s upcoming Carbon Border Adjustment Mechanism (CBAM), which links tariffs to the carbon intensity of imports. Poundrik said the limits of carbon emission proposed in CBAM will affect exports.