Heavy Industry in India

Heavy industry plays a foundational role in India’s economy, contributing significantly to its GDP, employment, and industrial development. The sector’s contribution to India’s GDP has been over 24%. India is projected to undergo a major economic transformation over the next few decades, with surging demand from infrastructure development, housing, and transport. By 2050, steel demand is expected to nearly quadruple, cement demand to triple , and fertilizer demand to double. Taken together, these industries not only underpin India’s industrial growth and export potential but also play a pivotal role in employment generation, infrastructure creation, and long-term economic resilience.

CO2 emissions by sector, India, 2022, Source: IEA

The industrial sector is also a major source of greenhouse gas emissions, accounting for more than 24% of India’s total emissions. In 2019, 73% of these emissions came from energy use, while the remaining 27% were process-related—stemming from chemical or physical transformations in production. Cement and chemical manufacturing are the largest contributors to process-related emissions, together responsible for nearly two-thirds of this category. Because process emissions are deeply embedded in industrial chemistry, they remain among the most difficult to mitigate, posing significant challenges for India’s decarbonisation pathway. In 2019, the combined emissions from steel, cement, and chemicals sectors reached 678 MtCO2e, accounting for approximately 68% of total industrial sector emissions.

In addition, industry is the single largest consumer of electricity in India, using 595 TWh in 2019, equivalent to 42% of the country’s total power consumption. This demand is met through a mix of grid-supplied electricity and captive generation, much of it still reliant on fossil fuels. These facts highlight two critical imperatives: first, that decarbonising heavy industries is central to India’s ability to meet its climate goals; and second, that scaling up renewable energy and low-carbon technologies is a key lever in the transition.

Iron and Steel industry in India

Crude steel capacity by state, Source: Global Iron and Steel Tracker

Steel is among India’s most strategic industries. In 2024, India produced 149.4 million tonnes (Mt) of crude steel. Ministry of Steel (MoS) reported a crude steel capacity of 179.515 million tonnes per annum (mtpa) in 2023-24. India holds the second-largest crude steel capacity globally (after China), producing 7.9% of the global crude steel. The steel industry contributes 2% to the country's GDP and employs about 5 lakh people directly and 20 lakh people indirectly. However, the per-capita steel use in India (95.2 kg/person) is far below the global average of 219 kg/person. The domestic demand is expected to keep climbing in the upcoming years. In 2017, the Ministry of Steel devised the National Steel Policy 2017 (NSP 2017) setting a capacity target of 300 MTPA capacity by 2030 to meet the increasing demand. NSP 2017 aims to scale up finished steel per capita use to around 160 kg by 2030-31.

The steel industry in India is clustered mostly around mineral rich states including Odisha, Chhattisgarh, Jharkhand and Karnataka. The major producers namely, Steel Authority of India, Rashtriya Ispat Nigam Limited, Tata Steel, ArcelorMittal Nippon Steel, JSW Steel, Jindal Steel and Power Ltd and NMDC Steel Ltd constitute around 60% share in total domestic production.

Construction and infrastructure, capital goods, and automobiles are the largest consumers of steel produced in India and constitute more than 85% of the total domestic steel demand.

Steel production by process, Source: Ministry of Steel

Production process

Steel in India is produced mainly via three production routes – Blast Furnace-Basic Oxygen Furnace (BF-BOF), Direct Reduced Iron – Electric Arc Furnace (DRI-EAF), and Induction Furnace (IF). In FY2023-24, nearly 43% of crude steel in India was produced using the BOF route, followed by IF (35%) and EAF (22%).

Nearly 65% of the iron production in FY 2023-24 came from blast furnaces and the remaining from DRI. India is one of the world's largest producers of sponge iron, and produced around 52 million tonnes of sponge iron in FY 2023-24. Over 81% of the total sponge iron production in India uses coal-based route.

Raw materials

Iron ore:The production of iron ore in the country increased from 258 Million Tonne in 2022-23 to 275 Million Tonne in 2023-24.

Coal:The demand of coking coal required for steel sector is only partially met by the domestic production as the supply of high-quality coal/ coking coal (low-ash-coal) in the country is limited. Therefore, the Indian Steel Industry has been largely dependent on imported coking coal. Most of the coking coal produced domestically in the country had a very high ash content making it redundant in the manufacture of steel, which led to import of 51.20 MMT (Million Metric Tonne) in 2020-21, 57.16 MMT in 2021-22, 56.05 MMT in 2022-23 and 58.12 MMT in 2023-24 coking coal. Major portion of this import is from Australia.

Steel Scrap: India announced a Steel Scrap Recycling Policy to enhance the use of steel scrap in steel manufacturing.

Steel decarbonization

• In December 2024, MoS released ‘Taxonomy of Green Steel’, establishing a framework to promote low-carbon technologies in steelmaking.
• In September 2024, MoS released a comprehensive Report titled “Greening the Steel Sector in India: Roadmap and Action Plan” based on the recommendations of 14 task forces representing government, industry, academia, and experts. The report outlines strategies across key levers such as energy efficiency, renewable energy, green hydrogen, material efficiency, shifting from coal-based to gas-based DRI, CCUS, and biochar use..
• Ministry of New and Renewable Energy (MNRE) has launched National Green Hydrogen Mission for green hydrogen production and usage. The steel sector is also a stakeholder in the mission, with ₹455 crore allocated for pilot projects through FY 2029–30. MoS has awarded projects to test 100% hydrogen-based DRI production and hydrogen injection in blast furnaces to reduce coal use.
• Earlier policy measures include the National Action Plan on Climate Change (2008) and its Perform, Achieve and Trade (PAT) scheme, which sets energy efficiency targets for industries. In steel, PAT targeted savings of 7.334 Mtoe, achieving 6.137 Mtoe, with tradable Energy Saving Certificates (ESCerts) issued to firms exceeding targets.

Cement industry in India

Operating cement capacity by state, Source: Global Cement and Concrete tracker

India’s cement industry is huge with an operating capacity of roughly 714 mtpa, making it the world's second largest cement producer after China accounting for nearly 14% of global capacity. The Indian cement sector accounts for about 1.2% of GDP and employs more than 0.5 million people. With its high quantity and quality of limestone deposits throughout the country, the cement industry promises huge potential for growth. The industry is concentrated in limestone-rich regions. The Indian cement industry is projected to grow at a CAGR of 5.1% from 2025 to 2030, driven by expansion in residential, infrastructure, commercial, and industrial sectors.

Cement is one of India’s largest industrial CO₂ sources. In 2022, cement production emitted roughly 5.8% of India’s CO2, while globally cement accounts for 7-8% of CO2.

Raw materials

Limestone:

Cement Decarbonization

• The National Council for Cement and Building Materials (NCB) signed two memorandum of understandings (MoUs) to boost sustainability in cement. One with GCCA India promotes joint research on net-zero goals, while the other with AIC-Plasmatech aims to apply Thermal Plasma Torch Technology for cleaner, more efficient production.
• The cement sector is covered by India’s energy-efficiency PAT scheme (with targets per plant).
• The cement sector will also enter the new Carbon Credit Trading Scheme for CO2 intensity.

Chemicals industry in India

India’s chemical sector is large and diverse, spanning basic chemicals, petrochemicals, fertilizers, specialty chemicals, dyes and more, and producing over 80,000 commercial products. India is the world's sixth largest producer of chemicals and third in Asia, contributing 7% to India's GDP. India is a world leader in some segments: e.g. 16–18% of global agrochemical production (4th largest) and 15% of dyes production. Exports of chemicals (including petrochemicals) reached ~Rs. 9.28 lakh crore (US$108 billion) in FY2025. Confederation of Indian Industry (CII) reported that the market size of the chemicals sector in India reached US$ 220 billion in FY2022 and is expected to reach US$ 383 billion by 2030.

The chemical industry is an important emitter of GHGs, though its share of India’s CO₂ is smaller than steel or cement. The industry directly contributes to around 4% of India’s greenhouse gases.

Production process and raw materials

The sector uses processes like catalytic cracking, polymerization, ammonia synthesis, chlor-alkali electrolysis, etc. Most feedstocks are hydrocarbons (natural gas, naphtha) and energy is a major cost.

Other resources:

• India Climate & Energy Dashboard
• GHG Platform India | Industrial Processes and Product Use emissions