UPSC Darpan

EconomyGS312 October 2026

Draft National Steel Policy targets 604 million tonnes capacity and cleaner steel by 2047

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The news

New Delhi. India released a draft national steel policy for public consultation late on Saturday, October 10, ET and The Indian Express (citing Reuters) report. It is a draft for comment, not a decision. It targets 604 million tonnes (mt) of capacity by 2047, from about 220 mt now, and per-capita consumption of 302 kg, from 116 kg. Exports are to reach 45 mt within two decades. The sector’s carbon-emission intensity is to fall from 2.54 to about 1.54 tonnes of CO2 per tonne of crude steel by 2047, “in line with India’s net zero” goal, through more scrap, hydrogen-based direct reduced iron, biochar, gasified coal and carbon capture. The ministry expects demand for 772 mt of iron ore and 236 mt of coking coal, partly to be met through overseas assets; MoUs are in place with Russia, Japan, South Korea, Brazil and Indonesia.

The chain in one line: Infrastructure demand → 604 mt target by 2047 → more ore and imported coking coal → more emissions unless the process changes → scrap and hydrogen-DRI cut intensity to 1.54 → exports survive CBAM

Static syllabus linkage

  1. The National Steel Policy 2017 is the policy this draft would replace. Approved in May 2017, it targeted 300 million tonnes of crude steel capacity and about 158 kg per-capita consumption by 2030-31, and aimed to cut coking-coal import dependence from about 85% to around 65% (PIB).
  2. India’s green steel taxonomy defines what counts as green. Released by the Ministry of Steel on 12 December 2024 (PIB), it calls steel green below 2.2 tonnes of CO2-equivalent per tonne of finished steel: five stars below 1.6, four stars for 1.6-2.0, three for 2.0-2.2. The National Institute of Secondary Steel Technology certifies it.

Why UPSC loves this

  1. Can India triple steel capacity and still cut the sector’s carbon intensity?. GS3 lists “changes in industrial policy and their effects on industrial growth” and “conservation, environmental pollution and degradation”. Expect three dimensions: raw-material security, decarbonising a hard-to-abate sector, and exposure to carbon border taxes.

Prelims nuggets

  • The National Steel Policy 2017 targeted 300 million tonnes of crude steel capacity by 2030-31.
  • Under India’s green steel taxonomy (2024), steel is green below 2.2 tCO2e per tonne of finished steel; the National Institute of Secondary Steel Technology certifies it.
  • The EU’s CBAM covers iron and steel, aluminium, cement, fertilisers, electricity and hydrogen.

Analysis

  1. The draft’s real test is value, not tonnes. A tonnage target rewards building furnaces; value comes from grades India still struggles to make, such as automotive and electrical steel. The draft itself says the sector must move “beyond capacity-led growth towards value creation”. The 2017 policy had the same aim for automotive steel, so the problem is old and unsolved. The other view is strong: at 116 kg a head, India genuinely needs volume. That holds, but volume without quality swaps imported special steel for surplus plain steel.
  2. Coking coal, not capital, is the binding constraint. Plants can be financed and built in a few years, but a blast furnace cannot run without coke. The draft expects 236 mt of coking coal demand and plans “strategic global outreach” and overseas assets, a quiet admission that domestic coal will not suffice. Buying mines abroad hedges price, not dependence. The counter-view is that the draft’s own green routes, scrap and hydrogen-DRI, need little or no coking coal. That is true, which makes raw-material security and green steel a single project.
  3. Lens — Development and environment: a cleaner tonne can still mean a dirtier sector. Intensity is emissions per tonne, not in total. On this card’s arithmetic, nearly tripling capacity while cutting intensity by about 40% would still raise total emissions by roughly two-thirds at today’s utilisation. And CBAM prices carbon at Europe’s border, so every tonne exported at 2.54 tCO2/tcs carries a charge cleaner rivals avoid. The other view: India’s per-capita emissions are low and its net-zero year is 2070, so growth now is fair. That is valid in climate talks, but it does not lower the CBAM bill.

Possible Mains question

“Beyond capacity-led growth towards value creation.” Examine how India’s draft National Steel Policy seeks to reconcile capacity expansion with decarbonisation. (15 marks, 250 words)

Model approach

  1. Directive — Examine. Probe the targets and tools, show where growth and decarbonisation pull apart, and judge how far they reconcile.
  2. Introduction — a draft for nearly three times today’s capacity. Sample: India’s draft National Steel Policy (October 2026) would raise capacity from about 220 to 604 million tonnes by 2047 while cutting emission intensity from 2.54 to 1.54 tCO2/tcs.
  3. Body — demand is real: 116 kg a head means a country still being built. Infrastructure, housing and renewables; target 302 kg.
  4. Body — coking coal imports are the binding constraint. 236 mt demand; the 2017 policy’s 85% dependence; overseas mines hedge price, not dependence.
  5. Body — falling intensity can still mean rising total emissions. Draw two bars: 220 mt × 2.54 against 604 mt × 1.54; the total still rises. Add CBAM from January 2026.
  6. Body — scrap, hydrogen-DRI and green procurement reconcile the two. Value addition: the 2024 green steel taxonomy (green below 2.2 tCO2e/tfs; five-star below 1.6).
  7. Conclusion — the Ministry of Steel should finalise with a demand lever. Sample: The Ministry of Steel should finalise the policy with green public procurement and a phased MSME path, so every added tonne is cleaner.

Administrator's brainstorm

As Secretary (Steel), MSME secondary-steel units tell you the draft’s green norms will shut them. What do you do?

My options: exempt small units, leaving the most numerous furnaces untouched; apply big-plant norms, closing units and costing jobs; or a separate, phased path, which I choose. First I would have the National Institute of Secondary Steel Technology measure emissions in sample induction-furnace and coal-DRI clusters, so the norm rests on data rather than assumption, then pair a later deadline with efficiency loans and cleaner power. The stakeholders are unit owners, their workers, buyers who need cheap steel and towns that breathe furnace smoke. The deciding principle is proportionality: the norm binds every producer, but the pace matches what each can carry.