FM invites Worldsteel to open India office, says carbon tariffs won’t solve steel surplus

New Delhi: Union finance minister Nirmala Sitharaman on Monday invited the World Steel Association (Worldsteel) to establish an office in India, citing the country’s growing importance as a driver of global steel demand and its expanding production capacity.

She also called for a coordinated approach to decarbonization, arguing that unilateral tariffs, including measures such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), would not address the structural problem of global excess steel capacity.

Addressing Worldsteel’s general assembly in New Delhi, Sitharaman said India had become the largest single source of incremental global steel demand, making a stronger presence in the country increasingly relevant for the industry’s global representative body.

“As Worldsteel enters its 60th year, I would invite the Association to consider establishing an office in India,” she said, pointing out that the association had opened its Beijing office in 2006, when China accounted for much of the growth in global steel demand.

The invitation comes as the global steel industry faces weakening output, rising excess capacity and mounting trade and energy uncertainties. World crude steel production declined 2% to 1.85 billion tonnes in 2025 and fell another 0.7% during January-August 2026, Sitharaman said. The Organization for Economic Co-operation and Development projects global excess capacity to rise from 600 million tonnes in 2024 to 720 million tonnes by 2027, exceeding the combined production of all OECD members.

Against this backdrop, she said, the industry needs to expand where genuine demand exists, correct structural imbalances, and secure supply chains while reducing emissions. “Successive unilateral tariffs merely redirect surplus steel from one market to another,” Sitharaman said, advocating multilateral disciplines on subsidies that sustain uneconomic capacity, supported by transparent data and rules-based trade.

EU carbon tax impact

Her remarks come as the European Union’s CBAM enters its definitive phase, increasing the importance of emissions measurement and carbon-related costs for steel exporters seeking access to the European market. Sitharaman stressed that the transition to lower-carbon steelmaking must be accompanied by credible emissions measurement, technology development and a fair sharing of transition costs.

“Decarbonize at a pace consistent with our development,” she said, identifying emissions reduction as a long-term priority even as India expands capacity to meet domestic infrastructure and industrial requirements.

India, the world’s second-largest steel producer since 2018, increased crude steel output by 10% to 165 million tonnes in 2025, while production rose another 6% during January-August 2026, according to the minister. Its share of global steel production has increased from 5.2% in 2014 to about 9%.

Domestic finished steel consumption more than doubled over the past decade to 164 million tonnes in 2025-26. Consumption has exceeded production for two consecutive years, underlining the strength of domestic demand. India is projected to account for about twice the net increase in global steel demand in 2026 and around 40% of the increase in 2027, based on Worldsteel’s April 2026 short-range outlook.

Sitharaman attributed this growth largely to sustained public investment. The Union government’s capital expenditure has increased sixfold, from about ₹2 lakh crore in 2014-15 to ₹12.2 lakh crore in 2026-27. With construction and infrastructure accounting for nearly two-thirds of India’s steel consumption, spending on highways, railways, ports, airports and metro networks provides a sustained market for producers.

However, she said capacity expansion must be matched by improvements in raw-material security, specialised manufacturing, technological capabilities and environmental performance.

Decarbonization strategy

India’s decarbonization strategy includes greater use of steel scrap, renewable electricity, direct reduced iron technology and green hydrogen. Four pilot projects for using green hydrogen in steelmaking have been awarded under the National Green Hydrogen Mission. Sitharaman also pointed to the potential of artificial intelligence in improving furnace and rolling-mill efficiency, as well as emerging nuclear technologies in providing reliable, low-carbon electricity.

The government’s priorities include expanding domestic production of specialty and high-grade steel, reducing dependence on specialized imports and improving recycling. The production-linked incentive scheme for specialty steel, with an approved outlay of ₹6,300 crore, is intended to support investment and technology upgrades.

Sitharaman also highlighted the importance of traceable carbon data for every tonnes of steel shipped, saying it was becoming an important condition for accessing premium markets.

India’s steel exports rose 36% in 2025-26 even as domestic consumption grew 7.6%, she said, underscoring the country’s potential as a supplier to global markets.

A stronger Worldsteel presence in India, Sitharaman said, would connect the association more closely with one of the world’s fastest-growing steel markets and provide a base to engage with South Asia, Southeast Asia, West Asia and Africa.

The broader challenge, she said, was to expand steel production and lower its carbon intensity simultaneously, without allowing trade barriers to substitute for a coordinated solution to global overcapacity.