Assocham Urges Hydrogen-Based DRI Incentives, Green Finance For Steel In Budget 2026–27

New Delhi, Jan 10 (KNN) Ahead of the Union Budget for 2026–27, industry body Assocham has urged the government to introduce targeted incentives for hydrogen-based direct reduced iron (DRI) production and provide concessional green finance to support the steel sector’s transition towards low-carbon manufacturing.

Push for Green Steel and Decarbonisation

In its pre-Budget recommendations, Assocham called for incentives to promote waste-heat recovery systems and the establishment of renewable captive power plants, stating that these measures are critical for reducing emissions from steelmaking, reported PTI. 

The chamber noted that decarbonisation presents both challenges and opportunities, and timely policy support could significantly accelerate the shift towards sustainable steel production.

Scrap Recycling and Resource Security

The industry body also advocated incentivising scrap collection and recycling, underlining that strengthening domestic recycling infrastructure through skilling initiatives is essential to reduce India’s dependence on imported raw materials.

Cost Pressures and Raw Material Constraints

Despite India being the world’s second-largest steel producer after China and recording a healthy growth rate of 8-9 percent, the sector faces mounting pressures, Assocham said. 

Elevated input costs, a depreciating rupee, and heavy reliance on imported coking coal, owing to negligible domestic mineable reserves, continue to weigh on producers.

The chamber also flagged concerns over iron ore availability, noting that production has remained stagnant and several auctioned mines are yet to commence operations. Rising steel demand and continued exports of iron ore are further tightening domestic supply, pushing up costs for local mills.

Budget Opportunity and Policy Reforms

Assocham said the upcoming Budget offers a crucial opportunity to position India as a global manufacturing hub for steel and value-added products under the ‘Make in India’ initiative. 

To support this objective, it has called for promoting iron ore beneficiation, removing import duties on critical raw materials, and rationalising royalty calculations to address issues of double taxation.

Focus on R&D and Technology

The chamber also stressed the need to incentivise research and development in steel recycling, alloy innovation, and process digitisation, stating that these steps would enhance productivity and reduce dependence on imports of speciality steel.

(KNN Bureau)