Steel industry seeks budget support for scrap use, faster green steel transition

New Delhi, Jan 20 (PTI) Ahead of the Union Budget, domestic steel industry stakeholders have urged the government to introduce measures to boost the use of scrap in green steel production, a key focus area as India works towards reducing carbon dioxide emissions.

Green steel production involves the adoption of low carbon-emitting technologies and greater use of alternative raw materials.

In its budget wishlist, the Indian Steel Association (ISA) has sought measures to promote increased use of scrap for green steel production. The apex industry body has also urged the government to extend the reverse charge mechanism under GST to the entire metal scrap supply chain to simplify compliance, curb tax leakages and improve ease of doing business.

Rating agency ICRA said the transition to low-carbon green steel is expected to remain a gradual and long-term process, as cost and technological constraints continue to hinder rapid decarbonisation.

A shift to green power alone could reduce emissions by about 13 per cent for blast furnace-basic oxygen furnace based mills and by up to 22 per cent for direct reduced iron based steelmaking units, said Girishkumar Kadam, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA.

Sandeep Kumar Jalan, Co-founder and Managing Director of A-One Steel India Limited, said green steel is central to the industry’s long-term trajectory, but managing higher capital intensity and energy costs in the initial phase remains a key challenge.

Clear budgetary support for renewable power integration and cleaner production technologies would help steelmakers plan investments with greater confidence, he added.

Parmod Sagar, Chairman, MD and CEO of RHI Magnesita India, said the refractory industry is an indispensable enabler of infrastructure growth and should be recognised as a critical sector.

He also called for a review of duties on essential raw materials and support for circular economy technologies to strengthen domestic manufacturing and supply chain resilience.

Former steel secretary Aruna Sharma said the steel industry has begun aligning with the Green Steel policy notified by the Ministry of Steel, but stronger fiscal intervention is needed to accelerate adoption.

She said the industry is already investing in the transition, which is clearly futuristic, but budgetary support is essential to speed up production and usage of green steel.

Sharma added that production through non-coal routes such as DRI and electric arc furnaces should be incentivised, while coal-based induction furnaces need to be gradually disincentivised. Mandating at least 20 per cent green steel usage in infrastructure projects and removing GST on green steel would help offset higher costs, she said.

Industry body ASSOCHAM has recommended fiscal support for hydrogen-based DRI production, access to concessional green finance, and incentives for captive renewable power, waste heat recovery and adoption of energy-efficient technologies. PTI ABI ABI ANU ANU