India's Green Steel Dilemma: Navigating Tariffs and Transition Challenges
Key Ideas
  • India is urged to propose a 'zero for zero tariff strategy' to the US for reciprocal tariff elimination, avoiding complex FTA negotiations.
  • The steel industry in India faces challenges from climate-aligned trade norms and subsidized green steel from advanced economies, necessitating policy interventions.
  • Experts emphasize the need for green steel production in India to align with global emission standards to remain competitive in international markets.
  • Policy levers such as the National Green Hydrogen Mission and Production Linked Incentive Scheme are crucial for supporting the green transition in the steel sector.
A recent report by the Global Trade Research Initiative suggests that India should explore a 'zero for zero tariff strategy' with the United States to facilitate reciprocal tariff elimination without formal trade agreements. This alternative approach aims to prevent India from making challenging concessions in a full-scale Free Trade Agreement. The steel industry in India is facing significant challenges due to climate-aligned trade norms and the rise of subsidized green steel from other countries. To address this, experts recommend aligning green steel production in India with global emission standards to enhance competitiveness. Several policy interventions have been proposed, including creating low-carbon capacity dedicated to carbon-sensitive export markets and investing in green power and steel scrap remelting. Industry leaders stress the importance of collaborative policymaking and green transition investments to ensure India's competitiveness. The government has introduced schemes like the National Green Hydrogen Mission and the Production Linked Incentive Scheme to support the steel sector's green transition. Experts suggest additional steps such as implementing public procurement mandates for green steel, establishing domestic carbon pricing mechanisms, and providing financial support for low-emission technologies and infrastructure development. Urgency is emphasized to accelerate India's green steel transition and maintain market share. The article highlights the significance of policy support, innovation, and global competitiveness in navigating India's green steel dilemma.
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