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India’s secondary steel sector will be critical to the country’s green steel transition, but financing constraints and technical gaps remain major barriers to decarbonisation. According to the Institute for Energy Economics and Financial Analysis (IEEFA), this sector contributes around 47% of India’s steel production and emits approximately 50 million tonnes of COâ‚‚ annually.
The IEEFA report highlights that limited funding, technical knowledge and project support are slowing the adoption of energy-efficient technologies among micro, small and medium-sized enterprises (MSMEs).
Financial and Technical Barriers
Many small steel producers prioritize working capital and capacity expansion over energy-saving investments. High project costs, limited access to loans, weak credit profiles and complicated subsidy procedures further discourage investment.
Although energy-efficient technologies can reduce operating costs, small mills need practical support to select suitable technologies, prepare bankable projects and implement them successfully. Linking energy savings with higher productivity and profitability can encourage wider adoption.
Market Impact
India’s green steel transition will create demand for energy-efficient equipment, improved production processes and technical services. However, progress may remain slow if small mills cannot access affordable financing and reliable technology.
IEEFA recommends project aggregation, longer loan tenures, risk-sharing mechanisms and technology performance guarantees instead of depending mainly on subsidies. Introducing International models to India’s steel sector, could also help reduce investment risks.
India’s green steel strategy must focus on making energy efficiency financially viable for small producers. Better financing, technical assistance and measurable cost savings can accelerate adoption. In the coming years, mills that improve energy efficiency may gain a competitive advantage through lower production costs and reduced carbon emissions. However, the pace of this transition will depend on effective policy support and easier access to finance.
