India's transition to green steel production could spare the country nearly $1 trillion in long-term coking coal import expenditure and sharpen its competitive edge in global export markets, according to a new study published by the India Energy and Climate Center (IECC) at the University of California, Berkeley. The findings, released on 19 May, arrive at a moment when India is preparing to significantly scale up its steelmaking capacity over the next decade.

The Coal Dependency Risk

The IECC report warns that if India's next phase of steel expansion continues along conventional lines, the country could be locked into importing roughly six billion tonnes of coking coal over the next four decades. It estimates that 60–65 per cent of the planned capacity expansion under India's National Steel Policy could still follow the coal-intensive blast furnace-basic oxygen furnace route. Operating such capacity at scale would demand approximately 161 million tonnes of coking coal annually, with around 90 per cent of that likely sourced from overseas — predominantly from Australia and other global suppliers.

'If future capacity is built around imported coking coal, the country would hardwire currency and price volatility risks into one of its most important industrial sectors,' said Neelima Jain, Director for Industrial and Trade Policy at IECC. 'Green steel offers an alternative path.'

The Green Hydrogen Opportunity

The study argues that India's abundant low-cost renewable energy resources provide a strong foundation for green hydrogen-based steelmaking, where hydrogen replaces imported coking coal in iron reduction. The IECC projects that by 2030, green hydrogen in India could be produced at approximately $3 per kilogram, enabling green steel output at around $562 per tonne — roughly 5 to 10 per cent above the cost of conventional steel from new plants.

Crucially, the report argues that a static cost comparison understates green steel's long-term advantage. Conventional steel production remains exposed to coking coal priced in US dollars, whereas green steel can be anchored to fixed-price, rupee-denominated renewable power contracts. 'Over time, that makes it far more resilient,' said Jose Dominguez, Research Manager at IECC. Once historical coking coal price increases and rupee depreciation are factored in, the study projects that green steel could reach cost parity with — or even undercut — conventional steel by around 2030.

Export Markets and Carbon Barriers

The report also flags a growing trade risk: India's carbon-intensive steel exports face mounting pressure from international carbon-related trade barriers, particularly in Europe. The European Union's Carbon Border Adjustment Mechanism (CBAM), which entered its definitive phase in January 2026, already covers steel imports and imposes additional costs linked to embedded carbon emissions. For Indian steelmakers targeting European buyers, this represents a structural headwind that green steel could neutralise.

'India's green hydrogen costs are among the lowest globally,' said Nikit Abhyankar, Co-Faculty Director of IECC. 'India could be one of the few countries where green steel becomes economically viable within this decade, giving domestic producers an edge in export markets. It could also strengthen competitiveness in downstream manufacturing sectors such as automobiles and machinery.'

What the Report Recommends

The IECC study calls for a structured market-creation framework to support early green steel projects. Its recommendations include long-term green steel procurement contracts, reliable access to clean power, emissions verification standards, and targeted risk-sharing mechanisms. 'India's experience scaling renewable energy and energy storage shows that well-designed public policy can accelerate cost reduction, unlock private investment, and speed early deployment,' said Amol Phadke, Faculty Director at IECC. 'Green steel will require a similarly deliberate market-creation effort.'

India is currently the world's second-largest steel producer after China and has set a target of reaching 300 million tonnes of installed steel capacity by 2030–31. Whether the country's next capacity wave locks in fossil fuel dependency or pivots toward green alternatives will shape both its industrial competitiveness and its trade relationships for decades to come.