Draft steel policy flags 3-fold rise in coking coal demand, 39% cut in emissions

The government has projected a more than three-fold increase in India's coking coal demand to 236 million tonnes (MT) by 2047 and set a target of cutting the steel industry's carbon emission intensity by 39%, while proposing to expand crude steelmaking capacity to 604 MT, according to the draft National Steel Policy Vision 2047 released late on October 10. The Ministry of Steel has invited comments and suggestions on the draft until October 30, 2026. The policy seeks to provide a long-term roadmap for the sector as demand rises from infrastructure, construction, manufacturing and urbanisation. India's installed steelmaking capacity stood at around 220 MT in FY26, while crude steel production was 170 MT. The draft projects finished steel consumption of 505 MT by 2047 and per-capita consumption of 302 kg, compared with 116 kg currently. Steel exports are targeted at 45 MT. The proposed expansion comes amid heightened geopolitical uncertainty and volatility in global commodity and freight markets. Disruptions linked to the Russia-Ukraine war and tensions in West Asia have added to shipping and input costs for steelmakers that depend on imported raw materials, particularly coking coal. Tata Steel estimated that the West Asia crisis had a cost impact of around ₹1,200 crore in the April-June quarter of FY27, highlighting the industry's exposure to global energy and raw material markets. JSW Steel had also flagged the impact during its July 17, 2026, Q1 FY27 earnings call, saying coking coal costs had risen by around $17 per tonne and the overall cost impact from the West Asia crisis was about $20 per tonne of steel. The draft seeks to strengthen domestic raw material availability and reduce exposure to supply disruptions by diversifying coking coal sources, securing overseas iron ore assets, expanding domestic coal washing capacity and improving transportation infrastructure. Coking coal demand to rise sharply Coking coal requirements are projected to rise to 236 MT by 2047 from 72 MT in 2025. India currently imports nearly 92% of its coking coal requirements, leaving steelmakers exposed to international prices and supply disruptions. Coking coal is processed into coke, which is used as both a fuel and a reducing agent in conventional blast-furnace steelmaking. The draft proposes diversifying import sources, expanding domestic mining and coal washing capacity, and improving raw material security. Iron ore demand is projected to rise to 772 MT by 2047 from 299 MT in 2025. The policy proposes securing high-grade iron ore reserves through overseas assets and joint ventures, alongside measures to improve domestic supply and transport infrastructure. It also envisages expanding slurry pipelines, which transport iron ore in a water-based mixture, to reduce reliance on road and rail transport and improve logistics efficiency. With raw materials accounting for 65-70% of total steelmaking costs, the draft policy also emphasizes technology-driven efficiency to protect margins, proposing the adoption of artificial intelligence and advanced analytics for coking coal blending to optimize diverse imported grades and monitor import vulnerabilities. Emissions intensity targeted at 1.54 tonnes The draft seeks to reduce the steel industry's average carbon emission intensity to 1.54 tonnes of carbon dioxide per tonne of crude steel by 2047 from 2.54 tonnes currently. The sector accounts for around 10-12% of India's carbon dioxide emissions. The proposed roadmap includes improving energy efficiency, increasing renewable electricity use, promoting scrap-based steelmaking and adopting hydrogen-based technologies and carbon capture. These measures will need to accompany capacity expansion to help the industry meet its emissions target. Scrap use, speciality steel in focus Steel scrap consumption is projected to rise to 123 MT by 2047 from 36 MT in FY26. The draft proposes a mission-mode scrap collection initiative modelled on the Swachhata Abhiyan to channelise scrap from households, industrial assets, construction waste and end-of-life vehicles into formal recycling. It also identifies speciality steel, domestic technology development and modernisation of smaller secondary steel producers as priorities. Speciality steel is used in applications requiring specific properties, including automobiles, defence and power equipment. The draft further proposes a dedicated steel industry safety framework to strengthen safety audits, accident reporting and emergency preparedness. The National Steel Policy 2017 had set a target of 300 MT of steelmaking capacity by 2030-31. The new draft seeks to establish a longer-term roadmap for expanding production while improving raw material security, global competitiveness and environmental performance.