School of International Service, American University & NXT Fellow 2026
India’s steel demand is expected to grow to unprecedented levels as the world’s largest democracy undergoes rapid urbanization. Along this scale of development, India sits at the intersection of immense challenges in decarbonizing its steel industry and opportunities to leverage its strategic position to lead in such innovation at scale.
From widespread infrastructure projects across rural India to the bustling streets of New Delhi, you can feel the speed of India’s emerging economy. Behind all these rapid developments, one industrial material takes center stage: steel.
Under the motto “Reform, Perform, and Transform,” the world’s fastest-growing economy is set to consume unprecedented amounts of steel in the coming decades. However, the climate and health implications of emission-intensive industries like steel are among the toughest challenges we face in the global energy transition today. Currently, the steel industry accounts for close to 11% of global $CO_2$ emissions, making it one of the most emission-intensive industries due to its coal-dependent production process.
The Production Paradox
India produces roughly 8% of the global crude steel output, but it is expected to account for one-fifth of global steel production by 2050. To meet this massive domestic demand, India has announced large-scale steel capacity expansions, which are currently dominated by emission-intensive, coal-based technology. Due to the nature of these technologies, including traditional blast furnaces, there is an inherent risk of stranded assets and carbon lock-in. However, India has a timely opportunity to shift its course toward greener alternatives as international alignment and investment in green steel pick up momentum.
While major steel producers expect modest growth in steel demand—and even a plateau or decline in China’s case—India’s steel demand is projected to grow by 5% to 7.3% annually, showcasing the strongest market expansion in the world. As India aims to go net-zero by 2070, the country is uniquely positioned to shape the future phase of global steel decarbonization. The central question remains: can India reform, perform, and transform its domestic steel sector amid evolving international and domestic dynamics?
Leveraging the Democratic Dividend
Yes, there are barriers at the structural, technological, financial, and social levels, but it is crucial for India to be ambitious in decarbonizing steel production by leveraging its democratic dividend and multi-alignment foreign policy. This ambitious journey will require close collaboration among policymakers, innovators, industry leaders, and, most importantly, the people. In addition to strong government encouragement and fiscal incentives, the private sector needs comprehensive competitiveness strategies to scale low-carbon steel successfully in global markets.
As Prime Minister Narendra Modi noted, the next generation of infrastructure belongs to India. This blueprint for progress undoubtedly includes pioneering the future of decarbonized steel.