CBAM to have larger impact on Indian exports, not US tariffs: India steel secretary

India's steel sector remains largely insulated from US tariffs due to minimal bilateral steel trade, but the EU's Carbon Border Adjustment Mechanism could pose a bigger challenge to exports, Sandeep Poundrik, secretary for the Indian Ministry of Steel, said Sept. 17.

Speaking at the Financial Times Energy Transition Summit in Delhi, Poundrik said India's direct steel exports to the US totaled just 100,000 mt in 2024, while India's overall exports reached 4.5 million mt.

The US imposed 50% blanket tariffs on steel imports early this year, jolting global steel trade flows.

According to the secretary, India's direct steel exports accounted for just 3% of its production in 2024, reflecting its limited trade exposure with the US as India's focus remained on domestic consumption.

India produced 152 million mt of steel in 2024 and is the world's second-largest producer.

However, speaking to Platts on the sidelines of the event, Poundrik acknowledged that there could be an indirect impact on the steel sector, mostly affecting steel products such as machinery. Platts is part of S&P Global Commodity Insights.

India exported about 6.9 million mt of steel products in 2024, according to S&P Global Commodities at Sea data.

CBAM impact

Speaking to the media on the sidelines of the event, Poundrik said that more than 60% of Indian steel exports headed to Europe in 2024, which is why CBAM could have a larger impact on India's steel exports.

"CBAM will definitely impact the exports," as Indian steel is predominantly produced through the blast furnace route, which is a highly carbon-intensive production process, he said.

The CBAM imposes a carbon charge based on carbon emissions from steel entering the EU. It will take effect in January 2026.

Decarbonization road map

Even as CBAM poses major challenges to India's exports, the country is working on a road map to help decarbonize the hard-to-abate sector.

The government has outlined plans to decarbonize the steel industry.

In the short term, through 2030, India aims to reduce emission intensity from 2.5 mt of CO2 per mt of steel to 2.2 mt through the adoption of renewable energy and efficiency improvements, according to Poundrik.

As part of the "medium-term plan," India is looking to capitalize on green hydrogen and carbon capture, utilization, and storage technologies, becoming commercially viable by 2045.

Estimates suggest that in the next five to seven years, the cost of hydrogen as an energy source will come down to about $2.50-$3/kg, Poundrik said, noting that costs below $2/kg would make hydrogen economically attractive for steelmaking.

"So if hydrogen becomes commercially viable, then the [Direct Reduced Iron – Electric Arc Furnace] route becomes a really attractive proposition for the steelmakers," he said.

"[M]ajor players have started pilot projects to use hydrogen instead of gas in [DRI] — in fact, two projects have already started," he said.

"We have also awarded projects for using hydrogen in blast furnaces, as well as we are starting some projects for using hydrogen in coal DRI or replacing coal DRI," Poundrik said.