Recent Searches
In brief
India’s economy recorded 6.4% growth in FY25, driven by strong demand in manufacturing and construction and supported by flagship initiatives such as Make in India and Aatmanirbhar Bharat. Steel demand has grown in parallel, positioning India as the world’s second-largest steel producer. Installed capacity currently stands at 200 million tons (MT) with a utilization rate of 76%. Production has risen from 105.8 MT in 2021 to a projected 152 MT in 2025, with long-term targets set at 300 MT by 2030. This expansion directly fuels the future of coking coal demand in India, as the blast furnace–basic oxygen furnace (BF–BOF) route, which depends heavily on coking coal, accounts for 65% of installed capacity and 58% of steel output. Nearly 80% of India’s coking coal consumption is tied to steel manufacturing.
Coking coal demand is expected to rise from 80 MT in FY25 to 135 MT by 2030. However, India’s domestic reserves face quality challenges, with high ash and sulfur content. Beneficiation capacity is severely limited—only around 5 MT of washed coal compared to 66 MT of raw production—forcing India to import 85% to 90% of its requirements. This heavy reliance on imports increases exposure to global market fluctuations. Australia dominates global supply, followed by Russia, the United States, and Mongolia, creating concentration risks. Geopolitical disruptions, as seen during the COVID-19 pandemic, the Russia–Ukraine conflict, and US–China trade tensions, have already highlighted the volatility of this structure. While newer exporters such as Mozambique and Indonesia are entering the market, dependence on a small group of suppliers remains a structural risk for the coal industry.
Steel production contributes 10% to 12% of India’s greenhouse gas emissions, compared to a global average of around 8%. While the global steel industry is moving toward net-zero by 2050, India’s target is 2070, reflecting the scale of BF-BOF assets and high costs of transition technologies.
The green steel transition is underway globally, with pathways such as hydrogen-based direct reduced iron (H₂-DRI), electric arc furnaces (EAF), and large-scale carbon capture remain nascent. International developments such as the Paris Agreement and CBAM will intensify pressure to accelerate transition, even as coal-based steel manufacturing continues to anchor near-term growth.
The early use of dashboards and automation is giving way to advanced AI and agentic systems that self-optimize operations.
On the consumption and supply chain side, AI-driven blending, real-time quality monitoring, and adaptive feed control are reducing coal use while stabilizing output quality. Logistics is benefiting from AI-enabled demand forecasting, route optimization, and intelligent supply chain control, which could evolve into autonomous orchestration platforms coordinating procurement, production, and distribution. In production, automation, robotics, and digital twins are enhancing mining, beneficiation, and processing. Emerging technologies such as plasma-based gasification, enzyme-assisted beneficiation, quantum mineral mapping, and microbial carbon capture promise to unlock greater use of low-grade domestic coal and enable lower-emission steelmaking.
Energy transition dialogues
Energy transition dialogues dives deep into the critical conversations shaping our energy future. We explore the challenges and opportunities of the global shift towards renewable energy, featuring insights from leading experts and diverse perspectives.
Improving geological data, accelerating coal block auctions, and pursuing overseas assets can help diversify supply, while industry players should jointly invest in new reserves and exploration. Expanding washery capacity, modernizing facilities, and enabling greater use of rejects and middlings will boost efficiency. Advanced beneficiation, blending, and carbon-reduction technologies must become part of industry practice. Strengthening logistics through port-based blending hubs, integrated data platforms across customs, rail, and ports, and sovereign supply assurance mechanisms will support resilience. Transparent pricing, through an India-specific coking coal index, and rationalized duties or flexible import quotas will also help stabilize supply. At the same time, sustainability must be tied directly to policy—through incentives for low-emission mining, methane capture, and biocoke—as well as through company-led initiatives in innovation hubs, waste management, and community partnerships. Parallel investments in research and skills are also essential, with scaled-up R&D programs across IITs and CSIR labs, creation of Centres of Excellence (CoEs) at the intersection of mining, AI, and environmental sciences, and modernized vocational programs to build expertise in digital mining and ESG auditing.
Looking ahead, India’s reliance on coking coal will persist through the next decade as steel demand rises with infrastructure and manufacturing growth. In the near term, priorities will center on efficiency gains, diversification of imports, and adoption of AI-driven optimization. Over the longer term, progress in hydrogen-based steelmaking, hybrid furnaces, scrap recycling, and carbon capture will be central to reducing coal intensity and ensuring that India’s steel sector remains globally competitive while moving toward sustainability.
Coking coal will remain integral, but embedded within a smarter, more resilient, and more sustainable steel ecosystem. The policy and investment decisions taken this decade will define whether India remains dependent on external dynamics or emerges as a leader in shaping a competitive and future-ready steel sector.
How EY-Parthenon can help
Explore EY's Hydrogen Toolkit for market analysis, carbon tracking, and LCOH insights to optimize your hydrogen strategy and sustainability.
Read moreDiscover EY energy transition insights, people and services, and how they can help your business unlock the opportunities of an uncertain future.
Read moreEY-Parthenon energy strategy consulting teams help C-suites drive future value-creation. Learn more.
Read moreRelated articles
Investment opportunities in India's Green Hydrogen sector
India aims to produce 5 MMT Green Hydrogen by 2030, boosting exports and industry growth with low-cost renewables, policy support, and hydrogen hubs.
How the demand for green steel in India is shaping future trends
India's green steel demand is set to surge, driven by climate goals, rising consumption, and sustainable shifts in construction, infrastructure, and auto.
Best mining practices in Indian states
India's mining sector contributes 2% to GDP. Explore challenges, best practices, and reforms to boost efficiency, sustainability, and economic growth.
