Sources say that India's steel minister is seeking $1.7 billion from the budget to assist mills reduce emissions.

Two government sources who are directly involved in the matter said that the Indian steel ministry requested 150 billion rupees (1,74 billion dollars) to be allocated to the budget as incentives for mills to produce low carbon steel.

Nirmala Sitharaman, Finance Minister, will present the federal Budget for 2025-2026 on February 1.

India, which is the second-largest steel producer in the world after China, is working on a policy to decarbonise the production of the alloy. This effort forms part of an overall push for reducing greenhouse gas emissions as part of a net-zero goal set by Narendra Modi.

Sources said that the steel ministry will offer incentives for reducing emissions, boosting research and development, and increasing raw material efficiency. It also plans to encourage banks to lower interest rates on loans related to renewable energy.

Emails seeking comments from the steel ministry were not answered.

Sources said that once funds were allocated to the Ministry, a proposal on the incentives offered to steel mills will be sent to the cabinet for approval.

Last month, the government defined 'green steel' as steel with carbon dioxide emissions less than 2.2 tons per ton.

Sources said that incentives would be in place until 2030. India is also looking at using green steel for government projects.

Global Energy Monitor reports that India's steel producers produce 2.55 tons of carbon dioxide for every ton of crude iron ore produced. This is 38% more than the global average, which is 1.85 tons. (Reporting and editing by Mayank Bhadwaj and Kirsten Donovan; Reporting by Neha rora)

(source: Reuters)