In December 2024, India's Ministry of Steel promised a Green Steel Mission worth an estimated Rs 15,000 crore to help steelmakers cut their carbon emissions. It would reward green steel output, support renewable power and require government departments to buy green steel, according to the ministry's year-end review.

Nearly two years on, none of that money has been approved. The promise has shrunk to a narrower Rs 5,000 crore scheme, and even that has slipped.

On June 29, a steel ministry official said it would be launched within three months. That deadline passed on September 30 with no cabinet approval announced.

The delay is costing India exports to Europe, which now taxes the carbon in imported steel; every month without public money makes it more likely that new plants are built the old, high-carbon way.

Europe is not the only place starting to charge for carbon.

India's own carbon market, run by the Bureau of Energy Efficiency, gives heavy industries targets for how much carbon dioxide they may emit per tonne of what they make. Factories that beat their targets earn credits they can sell, and those that fall behind must buy them.

Saurabh Diddi, a director at the bureau, had said in February that the first credits were expected to be issued by October and trading would start between November and January.

Steel, which produces 10% to 12% of India's greenhouse gas emissions according to official data, is left out of the first round because its targets are not yet final. When they are, a mill that pollutes more will pay more.

Squeezed from both sides, India's largest steelmakers have stopped waiting for the government. JSW Steel, Tata Steel, Jindal Steel and the state-owned SAIL are paying for cleaner steel themselves, each in its own way.

That might work for companies big enough to pay. It won’t for the smaller mills, the ones the promised money was primarily meant for, that make half of India's steel, cannot.

How The Promise Shrank

The money was meant to follow a plan.

In September 2024, the Ministry of Steel published a roadmap for cleaner steel, prepared by 14 task forces. In December 2024, it released a Green Steel Taxonomy, the first of its kind anywhere.

Steel counts as green if making a tonne of it releases less than 2.2 tonnes of carbon dioxide – it earns the top five-star rating below 1.6 tonnes.

Most Indian steel fails that test.

The industry averages 2.55 tonnes of carbon dioxide for every tonne of crude steel, the raw metal before it is rolled into products, against a world average near 1.9 tonnes, according to official figures. The taxonomy counts finished steel, so the comparison is approximate, but the gap is too wide to close on a technicality.

Closing that gap needs new equipment, which the mission was meant to help pay for.

By September 2025, the reported figure had fallen to about Rs 5,000 crore, for a narrower scheme aimed mainly at smaller mills. The ministry has not explained the cut. The Rs 15,000 crore was only an estimate – it was never approved

In June 2026, the scheme resurfaced under a new name, the National Strategy for Sustainable Secondary Steel, still at Rs 5,000 crore. Even if it arrives, that is about $520 million, less than the $1 billion (about Rs 9600 crore) JSW Steel alone has set aside for its own plants.

It has since been renamed again as the Viksit Bharat Ispat scheme, and folded into a new draft National Steel Policy.

Incentives would be tied to output and to cuts in emissions, but the proposal has yet to go for final approval. The steel ministry, which drafts the scheme, has given no public reason for the delay.

Meanwhile, the only public money committed to cleaner steel so far comes from the separate National Green Hydrogen Mission, which sanctioned Rs 347 crore for three hydrogen pilots in steelmaking in October 2024.

Help on the buying side has stalled too. A proposal for a central agency to buy green steel in bulk for government projects was rejected by the finance ministry in 2024.

Four Companies, Four Routes

With neither a subsidy nor a government buyer, each of the four big steelmakers has picked a route shaped by where it sells and what it already owns.

JSW Steel, the JSW group's flagship with its largest plant at Vijayanagar in Karnataka, is treating green steel as something to sell. It puts its emissions at 2.36 tonnes per tonne of crude steel, and its $1 billion programme aims to bring that down to 1.95 by 2030.

It markets low-emission steel under the GreenEdge brand, backed by carbon credits verified by an independent auditor.

Its first GreenEdge export order, shipped between April and June, marked the move "from product launch to active market adoption", Joint MD and CEO Jayant Acharya told analysts.

On the same call, it reported using 16% more scrap than a year earlier, and said its 1 million tonne electric furnace at Kadapa in Andhra Pradesh is due to start in FY29.

Tata Steel, the Tata group's steelmaker with plants in India, the Netherlands and Britain, is spending most heavily in Europe, where carbon is already taxed.

Its Port Talbot works in Wales is replacing its blast furnaces with a 3.2 million tonne electric arc furnace, which melts scrap using electricity instead of making iron from ore with coal.

Construction began in July 2025 with production due in 2027; in July, chief financial officer Koushik Chatterjee said the work was "largely on schedule". The grid connection the furnace needs, however, is now not expected until 2029. "There was no delay on Tata Steel's part," chief executive TV Narendran said last month, as the company sought talks with the UK government.

In India, it has started small. Its first scrap-based electric furnace, a 0.75 million tonne unit at Ludhiana in Punjab, opened in March.

Jindal Steel, formerly Jindal Steel & Power, with its main plant at Angul in Odisha, has chosen a route that starts with coal. It turns domestic coal into gas and uses that gas to make iron, at what it calls India's first such plant; a group company is building green hydrogen capacity at Angul to feed it.

Gasification paired with carbon capture "will lower emission intensity," according to PK Biju Nair, executive director at Angul. The steel ministry's own roadmap, as reported by Argus, found that coal-gas iron emits about as much as older coal-based methods unless the carbon dioxide is captured, and capture adds cost.

SAIL, the state-owned Steel Authority of India with five integrated plants, is furthest behind.

Its plants emitted 2.53 tonnes of carbon dioxide per tonne of crude steel in FY26, the year to March 2026, above its own interim goal of 2.41, according to its annual report.

Two years ago its then chairman, Amarendu Prakash, called aligning the steel sector with climate commitments "non-negotiable".

Its first concrete step came in April, when it hired Forbes Marshall to inject hydrogen into a blast furnace at Bokaro, a pilot under the National Green Hydrogen Mission.

Hydrogen and carbon capture feature heavily because the cheapest route, melting scrap, has a ceiling. India does not generate enough scrap, because its stock of old steel is relatively young and recycling is poorly organised, according to EY.

JSW and SAIL report figures on the same basis as the national average. Neither is yet below the government's 2.2-tonne line.

Why They Are Spending Anyway

If none of this yet meets the government's own standard, why spend at all?

The main reason lies in Europe. Since January 1, the European Union's Carbon Border Adjustment Mechanism (CBAM) has charged importers for the carbon in the steel and other goods they bring in. Only 2.5% of the full charge applies this year, rising each year until it applies in full in 2034.

The same rule is pushing European prices up.

Arun Maheshwari, JSW's director for commercial and marketing, told analysts in July that Europe "will continue to remain a very high-priced market" because of CBAM, putting hot-rolled coil at about $800 a tonne there against about $600 in India.

Tata Steel’s Chatterjee said the levy, together with tighter import limits, had helped reset European steel prices. Narendran framed it as fairness. "European steel producers pay a carbon tax. We pay a carbon tax," he said on the same call.

Cleaner steel, then, buys continued access to the best-paying steel market in the world. Europe took 35% to 40% of India's steel exports last quarter, by JSW's estimate.

Investors have noticed, but only on the European side. Axis Securities raised its valuation of Tata's European business in February, citing CBAM. Nobody has yet put a visible value on green steel made in India.

What The Dithering Is Costing

For steel made in India, the same levy is the first cost of delay. It is already showing up in trade. In the first four months of the levy, January to April 2026, India's iron and steel exports to the EU fell 13% on year, according to Department of Commerce figures.

The slide began before the levy. In the year to March 2025, iron and steel exports to the EU fell 35.1% on year to about $3.05 billion as European buyers pulled back early, according to the Global Trade Research Initiative.

What the levy has cost Indian exporters this year is not yet known. Importers buy certificates for 2026 shipments only from February 2027, and the first quarterly price was set at €75.36 per tonne of carbon dioxide.

The bill will grow. Exporters who cannot document their actual emissions are charged on default values, marked up by 10% this year and 30% from 2028. Wood Mackenzie, a consultancy, estimates CBAM could raise the delivered cost of Indian steel in Europe by about 56% by 2034.

The big four can afford the measurement systems and cleaner furnaces that soften that blow. Most smaller exporters cannot.

The second cost is lock-in.

The Institute for Energy Economics and Financial Analysis (IEEFA) notes that 92% of India's planned growth in steelmaking, from 180 million tonnes a year to 300 million, has not yet been built. Steel plants run for 30 to 40 years. Capacity ordered on conventional technology while the scheme waits will keep India's steel emissions high into the 2060s.

The third cost falls on the mills the scheme was meant for.

Secondary producers make half of India's steel. The ministry says fewer than half of them use modern technology, compared with 50% to 60% of large producers. Without help, they will fall further behind the large mills, and further below the government's own green line.

The delay also leaves Indian steel without a price for being clean.

No Indian steelmaker has disclosed whether buyers pay more for its cleaner steel. IEEFA cites Sweden's Stegra, which signed long-term contracts to sell hydrogen-made steel at 20% to 30% above the normal price.

Projects that failed to win such premiums were cancelled even after receiving grants. The bulk-buying agency the finance ministry turned down could have created one at home.

Who Pays For The Gap

India's own carbon market may not force the pace once steel joins it. The draft targets ask the biggest steelmakers for cuts of only 2% to 5% by 2026-27, according to a report by the research group Climate Risk Horizons. Targets that mildly reward small efficiency gains rather than new kinds of plants.

India's big steelmakers have shown they will move without public money when an export market pays for it. That covers only a handful of plants and a slice of exports.

The rest of the industry, the smaller mills above all, will follow only when the money the government promised arrives at a scale that changes what gets built. Until then, India is paying for its indecision. Its steel exports to the EU fell 13% in the first four months of the levy, and every blast furnace ordered now will keep polluting into the 2060s.