Key Highlights
- The Government of India has issued a revised draft notification proposing Greenhouse Gas Emission Intensity (GEI) targets for 255 iron and steel plants under the Carbon Credit Trading Scheme (CCTS).
- The revised targets cover major steel producers, including Tata Steel, JSW Steel, SAIL and ArcelorMittal Nippon Steel India.
- FY2023-24 has been retained as the baseline year, while FY2026-27 will be the first compliance year.
- Steel companies achieving or exceeding their targets will earn tradable carbon credit certificates, while non-compliance could attract environmental compensation equivalent to twice the average traded carbon credit price.
- The government has invited public comments on the revised draft within 60 days.
Introduction
India has taken another significant step towards decarbonising its steel industry by proposing revised greenhouse gas emission intensity targets for 255 iron and steel plants under the Carbon Credit Trading Scheme (CCTS). The revised draft notification issued by the Ministry of Environment, Forest and Climate Change reflects the government's continued focus on building a market-driven mechanism for reducing industrial emissions. Unlike conventional environmental regulations, the CCTS rewards companies that outperform their assigned emission targets while imposing financial consequences on those that fail to comply. As the steel sector accounts for one of the highest shares of industrial carbon emissions, this proposal is expected to play a crucial role in shaping the industry's sustainability roadmap over the coming years.
What Has Changed in the Revised Draft?
The revised draft follows an earlier proposal released in 2025, with the government making marginal changes before inviting fresh stakeholder feedback. The framework continues to use FY2023-24 as the baseline for calculating emission intensity, while FY2026-27 has been designated as the first evaluation year for compliance. Although the government has not explained the reasons behind the revisions, the updated draft reflects its effort to refine the implementation framework before final notification. Once finalised, the steel sector will become the ninth carbon-intensive industry to come under India's carbon market framework, joining sectors such as cement, aluminium, petroleum refining, petrochemicals, textiles, chlor-alkali, pulp and paper.
Market Analysis
The proposed emission intensity targets are expected to accelerate investments in energy efficiency, cleaner production technologies and low-carbon steelmaking across India's steel industry. Companies with modern facilities and relatively lower carbon footprints may find it easier to achieve their assigned targets and generate additional revenue through the sale of carbon credits. In contrast, older and energy-intensive plants may need significant capital expenditure to upgrade equipment and improve operational efficiency before the compliance period begins. The proposal therefore introduces not only an environmental obligation but also a new competitive dimension, where operational efficiency and carbon performance become important business differentiators.
Industry Impact
For India's leading steel producers, the Carbon Credit Trading Scheme represents both a compliance challenge and a commercial opportunity. Organisations investing in renewable energy, waste heat recovery, energy-efficient blast furnaces and alternative ironmaking technologies are likely to benefit from stronger carbon performance under the scheme. At the same time, companies failing to achieve their prescribed emission intensity targets could face financial penalties linked to carbon credit prices, increasing the cost of non-compliance. The framework is therefore expected to encourage continuous technological upgrades while supporting India's broader commitment to reducing the emissions intensity of its economy under international climate commitments.
Metalsbuy Market Pulse Insight
The revised emission intensity targets mark an important transition for India's steel industry from traditional environmental compliance towards a market-based carbon management system. Instead of treating sustainability purely as a regulatory requirement, the Carbon Credit Trading Scheme introduces direct financial incentives for companies that reduce emissions more efficiently than their peers. Over the long term, carbon efficiency could become as important as production cost, product quality and operational scale in determining competitiveness within the Indian steel sector. Companies that begin preparing early through investments in cleaner technologies and process optimisation are likely to gain a significant advantage as India's carbon market gradually matures.
Conclusion
India's revised proposal for emission intensity targets demonstrates the government's intention to integrate climate objectives with industrial growth through market-based reforms. By covering 255 iron and steel plants under the Carbon Credit Trading Scheme, the framework has the potential to significantly influence investment decisions, technology adoption and operational strategies across the sector. While the draft is currently open for stakeholder consultation, it sends a clear message that carbon performance will become an increasingly important metric for India's steel industry. As implementation progresses, companies that proactively embrace low-carbon manufacturing are likely to be better positioned in both domestic and international markets.