Assocham is seeking incentives for hydrogen-based steel production and green financing in the FY27 budget

rolls of steel sheet in a factory

Finance Minister Nirmala Sitharaman is expected to table the Union Budget for the financial year 2026-2027 in Parliament on February 1, 2025.

In its pre-Budget recommendations for the domestic steel sector, the chamber also suggested incentives for waste heat recovery systems and the establishment of renewable power plants to curb emissions.

The industry body noted that decarbonization presents both a challenge and a competitive opportunity, saying these measures can accelerate sustainable production.

Assocham further advocated encouraging scrap collection and recycling, noting that strengthening domestic recycling infrastructure through skills is essential to reduce the country’s dependence on imports.

Highlighting the challenges, Assocham pointed out that despite being the world’s second largest steel producer after China and maintaining a healthy growth rate of 8-9 percent, the sector faces significant headwinds.

Higher input costs of key raw materials, a depreciating rupee and heavy dependence on imported coking coal – due to negligible domestic mineable reserves – remain major pain points.

Furthermore, the chamber stated that iron ore production is stagnating and many of the auctioned mines have yet to begin production. Growing demand for steel and continued exports of iron ore are putting pressure on supply, resulting in high costs for domestic factories.

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

To achieve this, the body has called for promoting iron ore enrichment, eliminating import duties on crucial raw materials and rationalizing royalty calculations to eliminate double taxation.

It also emphasized that boosting research and development in steel recycling, alloy innovation and process digitalization will increase productivity and reduce dependence on specialty steel imports.

Published on January 8, 2026