Posted on 27 Aug 2025
India’s steelmakers are turning to scrap as the fastest route to cut carbon emissions, while simultaneously expanding direct reduced iron (DRI) capacity to secure long-term raw material stability, panellists highlighted at a recent industry event attended by Kallanish.
Scrap currently accounts for just 4-5% of crude steel production in India. Tata Steel aims to increase this to 10%, following the framework of environmental standards organisation ResponsibleSteel which recognises environmentally sourced scrap for carbon accounting.
“If we follow ResponsibleSteel standards, we will need to use scrap,” said Vivek Prasad, head of Tata Steel’s recycling business.
The government’s new greenhouse gas emission Gazette sets strict carbon intensity targets for 130 plants by 2025-26 and 2027-28. “Every plant has targets now. This is forcing firms to cut [carbon] faster,” Prasad added.
Alternative methods such as hydrogen injection or biochar remain experimental. Scrap is currently the only scalable solution for reducing carbon emissions.
Tata Steel’s recycling plant in Uttar Pradesh underlines the need for in-house scrap processing. International peers such as Nucor control 30-40% of scrap via captive plants. Indian integrated mills are expected to secure 25-30% in-house, while secondary producers may face supply challenges.
At the same time, scrap imports in India have fallen around 20% y-o-y over the past decade, while domestic steel demand continues to rise. India now produces more than 150 million tonnes of crude steel, aiming for 200mt by 2030. Shortfalls of roughly 10mt/year of scrap are creating pressure, prompting integrated mills to rely more on DRI.
DRI capacity has expanded from 42mt to 50mt in the past year, with producers using 40-50% DRI in furnaces at times.
India’s growing DRI focus amid scrap shortage contrasts with regional buyers like Bangladesh, who are diversifying imports from Japan, Singapore, Australia, and New Zealand.
India’s abundant iron ore, boosted by new deposits in Chandrapur and Gadhchiroli, Maharashtra, makes DRI production cost-effective.
Beyond pricing, the shift underscores steelmakers’ preference for locally sourced raw materials to secure long-term supply stability.
Experts say the combined strategy signals a broader mindset change. Scrap remains essential for green steel, while DRI secures stable, cost-effective, and lower-carbon production.
Source:Kallanish
