In a bid to accelerate India’s transition toward sustainable manufacturing, industry body ASSOCHAM has urged the government to introduce fiscal support for the steel sector in the upcoming Union Budget for the Financial Year 2026-27.
The industry body’s pre-budget memorandum emphasizes the need for a low-carbon roadmap. It highlights that while India remains the world’s second-largest steel producer, the industry faces mounting pressure from high input costs and environmental mandates.
Focus on green hydrogen and finance:
ASSOCHAM has specifically recommended the introduction of incentives for hydrogen-based direct reduced iron (DRI) production. This move is seen as critical for reducing the sector’s reliance on traditional coking coal. To support this capital-intensive shift, the chamber has also pitched for concessional green finance to help domestic mills adopt cleaner technologies.
Recommendations:
ASSOCHAM pointed out that despite a robust growth rate of 8-9%, the sector is battling headwinds such as a depreciating rupee and stagnant domestic iron ore production. To mitigate these challenges, the body suggested:
• Incentivizing waste-heat recovery systems.
• Establishing renewable captive power plants.
• Removing import duties on critical raw materials.
• Rationalizing royalty calculations to eliminate double taxation.
Thought leadership:
The chamber highlighted the strategic importance of this transition, noting that the global landscape for steel is shifting toward sustainability.
In its official recommendation, ASSOCHAM stated:
“Decarbonization presents both a challenge and a competitive opportunity… these measures can accelerate sustainable production.”
The industry body believes the upcoming budget, expected on February 1, 2026, offers a vital window to position India as a global manufacturing hub for steel and value-added products. The strategic alignment aims to strengthen the domestic industry while advancing the objectives of the Make in India initiative.
