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VOL. 4
SECTORAL INSIGHTS:
INDUSTRY
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
VOL. 11
SOCIAL IMPLICATIONS
OF TRANSITION
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO Copyright © NITI Aayog, 2026
NITI Aayog
Government of India,
Sansad Marg, New Delhi–110001, India
Suggested Citation
NITI Aayog. (2026). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights:
Industry (Vol. 4)
Available at: https://niti.gov.in/publications/division-reports
Disclaimer
1.This document is not a statement of policy by the National Institution for
Transforming India (hereinafter referred to as NITI Aayog). It has been prepared
by the Green Transition, Energy, Climate, and Environment Division of NITI Aayog
under various Inter-Ministerial Working Groups (IMWGs) constituted to develop
Net-Zero pathways for India.
2.Unless otherwise stated, NITI Aayog, in this regard, has not made any representation
or warranty, express or implied, as to the completeness or reliability of the
information, data, findings, or methodology presented in this document. While due
care has been taken by the author(s) in the preparation of this publication, the
content is based on independently procured information and analysis available at
the time of writing and may not reflect the most current policy developments or
datasets.
3.The assertions, interpretations, and conclusions expressed in this report are those
of the author(s) and do not necessarily reflect the views of NITI Aayog or the
Government of India, unless otherwise mentioned. As such, NITI Aayog does not
endorse or validate any of the specific views or policy suggestions made herein by
the author(s).
4.NITI Aayog shall not be liable under any circumstances, in law or equity, for any
loss, damage, liability, or expense incurred or suffered as a result of the use of or
reliance upon the contents of this document. Any reference to specific organisations,
products, services, or data sources does not constitute or imply an endorsement
by NITI Aayog. Readers are encouraged to independently verify the data and
conduct their analysis before forming conclusions or taking any policy, academic,
or commercial decisions. SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
SECTORAL INSIGHTS:
INDUSTRY
(VOL. 4) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry iii Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry iv Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry v Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry vi Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry vii
Authors and
Acknowledgement
Chairperson
Dr. V. K. Saraswat
Member, NITI Aayog
Leadership
Sh. Suman Bery
Vice Chairman, NITI Aayog
Sh. B.V.R. Subrahmanyam
CEO, NITI Aayog
Dr. Anshu Bharadwaj
Programme Director, Green Transition,
Energy & Climate Change Division, NITI
Aayog
Sh. Rajnath Ram
Adviser, Energy, NITI Aayog
Core Modelling Team
Sh. Venugopal Mothkoor
Energy and Climate Modelling Specialist,
NITI Aayog
Dr. Anjali Jain
Consultant, NITI Aayog
Sh. Nitin Bajpai
Consultant, NITI Aayog
Authors
NITI Aayog (Lead Authors)
Sh. Venugopal Mothkoor
Energy and Climate Modelling Specialist,
NITI Aayog
Dr. Anjali Jain
Consultant, NITI Aayog
Sh. Nitin Bajpai
Consultant, NITI Aayog
Ms. Srishti Dewan
Young Professional, NITI Aayog
Knowledge Partners
Sh. Vaibhav Chaturvedi
Senior Fellow, CEEW
Ms. Pallavi Das
Programme Lead, CEEW
Sh. Anurag Dey
Programme Associate, CEEW
Ms. Chetna Arora
Programme Associate, CEEW
Sh. Zaid Ahsan Khan
Programme Associate, CEEW
Ms. Shruti Dayal
Senior Program Associate, Ex-WRI India
Ms. Jyoti Sharma
Senior Program Associate, WRI India
Ms. Meghana Munagala
Senior Program Associate, WRI India
Sh. Abhijit Namboothiri
Program Associate, WRI India
Sh. Abhishek Bhardwaj
Senior Program Associate, WRI India
Ms. Gowthami T S
Program Manager, WRI India
Sh. NGR Kartheek
Senior Program Manager, WRI India
Sh. Arpan Golechha
Program Manager, WRI India
Ms. Ashwini Hingne
Associate Director, WRI India Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry viii
Peer Reviewers
Sh. Sharath Kumar Pallerla
Scientist G, Ministry of Environment,
Forest and Climate Change (MoEFCC)
Sh. Ajay Raghava
Deputy Director, Ministry of Environment,
Forest and Climate Change (MoEFCC)
Sh. Maimun Alam
Director, Ministry of Steel
Sh. Ravi Prajapati
Joint Director, BEE
Sh. Shikhar Jain
Executive Director, CII
Sh. Ravi Kumar
Consultant, NITI Aayog
Technical Editors
Sh. Nihar Gokhale
Communication Specialist (Independent)
Ms. Rishu Nigam
Communication Specialist (Independent)
Working Group Members
Sh. Jawahar Lal
Member Secretary of the Working Group,
General Manager (Energy), NITI Aayog
Sh. Venugopal Mothkoor
Member Secretary of the Working Group,
Energy and Climate Modelling Specialist,
NITI Aayog
Dr. L. P. Singh
Director General, NCCBM
Dr. Neeraj Sinha,
Adviser/Scientist ‘G’, PSA
Sh. Ashwini Kumar
Economic Advisor, Ministry of Steel
Sh. Shri Deepak Mishra
Jt. Secretary, (Petrochemicals Division),
Dept. of Chemicals and Petrochemicals
Ms. Sujata Sharma
Jt. Secretary (Marketing and Oil Refinery),
MoPNG
Sh. Anandji Prasad
Advisor (P), Ministry of Coal
Sh. Ashok Kumar
Deputy Director General (DDG), BEE
Sh. Sharath Kumar Pallerla
Scientist G, Ministry of Environment, Forest
and Climate Change (MoEFCC)
Sh. Vinamra Mishra
Director, MoMSME
Sh. Ajay Raghava
Deputy Director, Ministry of Environment,
Forest and Climate Change (MoEFCC)
Sh. Gaurav Kishore Joshi
Deputy Secretary (Manufacturing Sector),
Ministry of Heavy Industries
Sh. Bajrang Maheswari
Technical Consultant (Hydrogen &
Decarbonisation Strategies), Ministry of
Heavy Industries
Ms. Jyoti Mukul
Chief, Energy, CII
Sh. Hemant Mallya
Fellow, CEEW
Sh. Sobhanbabu PRK
Senior Fellow, TERI
Sh. Arpan Gupta
Director, FICCI
Sh. Sachin Kumar
Director, Shakti Sustainable Energy
Foundation
Ms. Gunjan Jain
Research Executive, FICCI
Ms. Ekta Sharma
Research Executive, FICCI Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry ix
Ms. Sarita Koli
Consultant, FICCI
Ms. Aditi Karki
Research Associate, FICCI
Sh. Sharvan Kr. Pushkar
Consultant, NITI Aayog (Co-ordinator)
Sh. Vishal Kumar
Young Professional, NITI Aayog
(Co-ordinator)
Collaborators/ Expert Consultants
Ms. Prachi Priya
Assistant Vice President, Economic & Public
Policy Research, Hindalco Industries Ltd
Sh. Himanshu Singh
Director (Strategy), Vedanta Ltd
Sh. Arvind Bodhankar
Head of Sustainability, AM/NS India
Sh. Deependra Kashiva
Director General, Sponge Iron Manufacturers
Association
Sh. Prakash Tatia
Welspun Steel Ltd.
Sh. R K Goyal
Managing Director, Kalyani Steels Ltd
Sh. Deepak Bhatnagar
Secretary General, Pellet Manufacturers
Association of India
Sh. Vijay Sharda
Chairman and Managing Director, Shabro
Metals & Technologies
Sh. Anil Dhawan
Director General, Alloy Steel Producers
Association of India
Sh. Rajeev Ranjan
GM (Business Planning), Steel Authority of
India Ltd
Sh. Koustuv Kakati
Head Regulatory Affairs (Trade & Economy),
Tata Steel Ltd
Sh. Sameer Singh
DGM - Sustainability, Jindal Stainless Ltd
Sh. V R Sharma
Vice Chairman, JSP Group Advisory Services
Sh. Prabodha Chandra Acharya
Chief Sustainability Officer, JSW Steel Ltd
Sh. Patel Sidhartha
Danieli India Ltd.
Sh. E R Raj Narayanan
Chief Manufacturing Officer, Ultra Tech
Cement Ltd
Sh. Ravindra Jain
Dy. General Manager (E&I), JK Lakshmi
Cement Ltd.
Sh. A.D. Saxena
Dy G M Geology, J K Lakshmi Cement Ltd
Sh. Yaswant Mishra
President (Corporate) and Chief Financial
Officer, Mangalam Cement
Sh. Rajesh Deoliya
Senior Vice President, My Home Industries
Pvt Ltd
Sh. Gajendra Pratap Singh
Joint President, Shree Cement Ltd
Sh. Narendra Singh
Chief Manufacturing Officer, Saurashtra
Cement Ltd
Sh. Birinder Singh
Director (Corporate Services), IFFCO
Sh. Vipul Varshney
DGM - Projects, YARA International Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry x
Communication and Research &
Networking Division, NITI Aayog
Ms. Anna Roy
Programme Director, Research & Networking
Sh. Yugal Kishore Joshi
Lead, Communication
Ms. Keerti Tiwari
Director, Communication
Dr. Banusri Velpandian
Senior Specialist, Research and Networking
Ms. Sonia Sachdeva Sharma
Consultant, Communication
Sh. Sanchit Jindal
Assistant Section Officer, Research and
Networking
Sh. Souvik Chongder
Young Professional, Communication
NITI Design Team
NITI Maps & Charts Team Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xi
Contents
List of Figures XIII
List of Tables XVI
List of Abbreviations XVII
Executive Summary XXI
1. Introduction.....................................................................................................................................1
2. Landscape of the Industry Sector in India............................................................................... 7
2.1 Indian Industry and the global context 8
2.1.1 Industrial Output: Sectoral Strengths 9
2.1.2 Energy and Emissions Profile 11
2.1.3 Lessons from Global Industrial Trends 12
2.2 Sectoral Deep Dives: Industry in the Indian and Global Context 12
2.2.1 Steel sector 12
2.2.2 Cement Sector 20
2.2.3 Aluminium Sector 24
2.2.4 Fertiliser Sector 28
2.2.5 Textile sector 31
2.2.6 Paper & Pulp 35
2.2.7 Ethylene 36
2.2.8 Chlor-Alkali 38
2.2.9 Refinery 39
2.2.10 Other Energy-Intensive Sectors: MSME sector 42
2.3 Low-Carbon Transition Levers: Global and National Industry Landscape 44
2.3.1 Energy Efficiency 44
2.3.2 Electrification 46
2.3.3 Low-Carbon Electricity Production 48
2.3.4 Alternative Fuels 49
2.3.5 Circular Economy 52
2.3.6 Carbon Capture, Utilisation, and Storage 54
2.3.7 Carbon Management 56 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xii
Contents
3. Industry Sector Modelling and Results..................................................................................59
3.1 Modelling Framework 60
3.2 Results for Industry Sub-sectors 63
3.2.1 Steel 63
3.2.2 Cement 69
3.2.3 Aluminium 74
3.2.4 Textile 79
3.2.5 Paper and Pulp 82
3.2.6 Ethylene 86
3.2.7 Chlor-Alkali 90
3.2.8 Fertiliser 94
3.2.9 Refineries 98
3.3 Overall Industry Results and Summary 102
4. Challenges and Suggestions.....................................................................................................111
4.1 Improving Energy Efficiency 112
4.2 Building Circularity in Manufacturing 113
4.3 Electrification of Industrial Energy Demand 116
4.4 Deployment of new technologies and fuels 117
4.5 Jobs and Trade-Enablers of Transition 119
Annexures...........................................................................................................................................123
References..........................................................................................................................................135 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xiii
List of Figures
Figure 1.1: Approach for developing the Net Zero Pathway 4
Figure 2.1: Industry (including construction), value added (% of total GVA) 9
Figure 2.2: Materials production of G7 members in the context of global production
(million tonnes) 10
Figure 2.3: Aluminium production of G7 members in the context of global production
(million tonnes) 10
Figure 2.4: Contribution of industry sub-sector emissions in 2022 (Globally) 11
Figure 2.5: Global comparison of steel production and consumption (million tonnes) 13
Figure 2.6: Historical production and consumption of steel (million tonnes) (MoS, 2024) 14
Figure 2.7: Technology-wise steel production, 2023-24 (MoS, 2024) 15
Figure 2.8: Estimated fuel-wise specific energy consumption 16
Figure 2.9: Energy mix (Mtoe, %) in steel sector in 2020 16
Figure 2.10: Global comparison of cement production, consumption, emissions,
and per capita consumption (million tonnes) 20
Figure 2.11: Historical production of cement (million tonnes) 21
Figure 2.12: Energy mix (Mtoe, %) in cement sector in 2020 22
Figure 2.13: Historical production of aluminium (million tonnes) 26
Figure 2.14: Energy mix (Mtoe, %) in aluminium sector in 2020 26
Figure 2.15: Historical production of major fertilisers, (million tonnes) 29
Figure 2.16: Estimated fuel-wise specific energy consumption of major Fertilisers 30
Figure 2.17: Historical production of textile, (million tonnes) 32
Figure 2.18: Energy mix (Mtoe, %) in textile sector 33
Figure 2.19: Historical production of paper and pulp through different routes (million tonnes) 35
Figure 2.20: Estimated specific energy consumption of paper and pulp industry (GJ/t) 36
Figure 2.21: Historical production of ethylene (million tonnes) 37
Figure 2.22: Estimated fuel consumption in ethylene production (GJ/t) 37
Figure 2.23: Historical production of chlor-alkali products (million tonnes) 38 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xiv
List of Figures
Figure 2.24: Estimated specific energy consumption in chlor-alkali products (GJ/t) 39
Figure 2.25: Historical trend of refining capacity in India (million tonnes) 40
Figure 2.26: Historical production of various petroleum products (million tonnes) 40
Figure 2.27: Fuel consumption in refinery sector in India (GJ/t) 41
Figure 2.28: Emission distribution across Indian MSME sectors 42
Figure 2.29: Key barriers to MSME adoption of sustainable energy solutions 44
Figure 2.30: Global industrial heat demand across low, medium, and high temperature ranges 46
Figure 2.31: Grid dependence across key industrial sectors (2022–23) 48
Figure 3.1: Modelling framework 61
Figure 3.2: Global comparison of GDP/capita vs steel use/capita 64
Figure 3.3: Crude steel production (million tonnes) 64
Figure 3.4: Final energy consumption in steel sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 66
Figure 3.5: Technology-wise steel production (million tonnes) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 67
Figure 3.6: Emission intensity of steel sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 67
Figure 3.7: Global comparison of GDP/capita vs cement use/capita 70
Figure 3.8: Cement production (million tonnes) 70
Figure 3.9: Final energy consumption in cement sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 72
Figure 3.10: Emission intensity of cement sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 73
Figure 3.11: Global comparison of GDP/capita vs aluminium use/capita 74
Figure 3.12: Aluminium production (million tonnes) 75
Figure 3.13: Final energy consumption in aluminium sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 77
Figure 3.14: Emission intensity of aluminium sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 78
Figure 3.15: Textile sector production (million tonnes) 79
Figure 3.16: Final energy consumption in textile sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 81
Figure 3.17: Emission intensity of textile sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 81
Figure 3.18: Projections for paper and pulp production (million tonnes) 83
Figure 3.19: Final energy consumption in pulp and paper sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 84 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xv
List of Figures
Figure 3.20: Emission intensity of paper & pulp sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 85
Figure 3.21: Projection of ethylene production in India (million tonnes) 86
Figure 3.22: Final energy consumption in ethylene (Mtoe) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 88
Figure 3.23: Emission intensity of ethylene sector (tCO
2
/t) under Current Policy Scenario (CPS) and
Net Zero Scenario (NZS) 88
Figure 3.24: Chlor-Alkali products production (million tonnes) 90
Figure 3.25: Final energy consumption in caustic soda industry (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 91
Figure 3.26: Final energy consumption in the soda ash industry (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 92
Figure 3.27: Emission intensities for caustic soda (left) and Soda Ash (right) (tCO
2
/t) under
Current Policy Scenario (CPS) and Net Zero Scenario (NZS) 92
Figure 3.28: Major fertiliser products production (million tonnes) 94
Figure 3.29: Final energy consumption of major fertiliser products (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 95
Figure 3.30: Emission intensity of the fertiliser sector (tCO
2
/t) 96
Figure 3.31: Final energy consumption in refinery (Mtoe) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 99
Figure 3.32: Emission intensity of refinery sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 100
Figure 3.33: Overall industrial energy supply mix and fuel type for captive electricity, 2020 102
Figure 3.34: Projections of demand (Mtoe) under Current Policy Scenario (CPS) and Net Zero
Scenario (NZS) 103
Figure 3.35: Green hydrogen projection in CPS and NZS (million tonnes) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 104
Figure 3.36: Net Zero Scenario - share of scrap in steel and aluminium, and clinker to cement
ratio in cement production projections 105
Figure 3.37: Break-up of residual emissions (MtCO
2
) 106
Figure 3.38: Total investment requirement (USD Trillion) 106
Figure 3.39: Technology-wise Investment requirement in NZS (USD Trillion) 107 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xvi
List of Tables
Table 2.1: Global and industrial GHG emissions (Million Tonnes of CO
2
equivalent) 11
Table 2.2: Summary of energy savings (BEE, 2023-24) 45
Table 2.3: Policy instruments supporting energy efficiency in industry 45
Table 2.4: Temperature range of potential electric heating technologies 47
Table 2.5: Schemes facilitating electrification of industrial processes 47
Table 2.6: Renewable electricity usage by industry (2022–23) (BEE, 2022-23) 49
Table 2.7: Policies enabling procurement and use of low-carbon electricity 49
Table 2.8: Types of low-carbon fuels 50
Table 2.9: Green hydrogen projects, (MNRE, 2023) 51
Table 2.10: Government initiatives promoting low-carbon and alternative fuels 52
Table 2.11: Circular economy policies for resource recovery and industrial recycling 53
Table 2.12: CCUS projects and initiatives in India 54
Table 2.13: Carbon management and trading mechanisms for industrial emission reduction 56
Table 3.1: Scenario assumptions for steel sector 65
Table 3.2: Scenario assumptions for cement sector 71
Table 3.3: Scenario assumptions for aluminium sector 76
Table 3.4: Scenario assumptions for textile sector 80
Table 3.5: Scenario assumptions for paper and pulp sector 83
Table 3.6: Scenario assumptions for ethylene sector 87
Table 3.7: Scenario assumptions for chlor-alkali sector 91
Table 3.8: Scenario assumptions for fertiliser sector 94
Table 3.9: Scenario assumptions for refineries sector 98
Table 3.10: Projections of demand breakup under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 103
Table 4.1: Challenges and suggestions for improving energy efficiency 113
Table 4.2: Challenges and suggestions for building circularity in manufacturing 114
Table 4.3: Challenges and suggestions for electrification of industrial energy demand 116
Table 4.4: Challenges and suggestions for deployment of new technologies and fuels 118
Table 4.5: Challenges and suggestions for managing jobs and trade 120
List of Tables Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xvii
List of Abbreviations
List of Abbreviations
ACCAdvanced Chemistry Cell
ADEETIE Assistance in Deploying Energy-Efficient Technologies in Industries and
Establishments
BF-BOFBlast Furnace–Basic Oxygen Furnace
BEEBureau of Energy Efficiency
BRSRBusiness Responsibility and Sustainability Report
CAPEXCapital Expenditure
CBAMCarbon Border Adjustment Mechanism
CCUSCarbon Capture, Utilisation and Storage
CH₄Methane
CO₂Carbon dioxide
CO₂eCarbon dioxide equivalent
COPConference of the Parties
CPCBCentral Pollution Control Board
CPPRICentral Pulp and Paper Research Institute
CPSCurrent Policy Scenario
DCDesignated Consumer
DRIDirect Reduced Iron
EAFElectric Arc Furnace
EEEnergy efficiency
EEFP
ELVs
Energy Efficiency Financing Platform
End-of-Life Vehicles
ESCOEnergy Service Company
ETSEmissions Trading System
FDIForeign Direct Investment
GDPGross Domestic Product
GeMGovernment e-Marketplace
GH
2
Green Hydrogen
GJGiga Joule Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xviii
List of Abbreviations
GoIGovernment of India
GtGiga Tonne
H₂Hydrogen
IAEAInternational Atomic Energy Agency
IEAInternational Energy Agency
IESSIndia Energy Security Scenarios
IPCCIntergovernmental Panel on Climate Change
IPMAIndian Pulp and Paper Manufacturers Association
IREDAIndian Renewable Energy Development Agency
ISOInternational Organisation for Standardisation
kWhKilo Watt-Hour
LC3Limestone Calcined Clay Cement
LTSLong-Term strategy
MACCMarginal Abatement Cost Curve
MDBSMultilateral Development Banks
MoMSMEMinistry of Micro, Small and Medium Enterprises
MNREMinistry of New and Renewable Energy
MoEFCCMinistry of Environment, Forest and Climate Change
MoPMinistry of Power
MoPNGMinistry of Petroleum and Natural Gas
MoRTHMinistry of Road Transport and Highways
MoSMinistry of Steel
MSMEMicro, Small and Medium Enterprises
Mt Million Tonnes
N₂ONitrous Oxide
NDCNationally Determined Contribution
Net Zero A state in which anthropogenic greenhouse gas emissions are balanced by
removals over a specified period
NZ / NZS Net Zero / Net Zero Scenario
OPEXOperating expenditure
PATPerform, Achieve and Trade
PLIProduction-Linked Incentive
PPPPublic–Private Partnership
R&DResearch and Development
RCORenewable Consumption Obligation
RERenewable Energy Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xix
List of Abbreviations
RESCORenewable Energy Service Company
RFNBORenewable Fuels of Non-Biological Origin
SAFSustainable Aviation Fuel
Scope 1 Direct GHG emissions from owned/controlled sources
Scope 2 Indirect GHG emissions from purchased electricity/steam/heat/cooling
Scope 3 All other indirect emissions in a value chain
SECs / ESCerts Energy Saving Certificates (under PAT)
SIDBISmall Industries Development Bank of India
SMRSmall Modular Reactor
T&DTransmission and Distribution
TIMESThe Integrated MARKAL EFOM System
TOETonne of Oil Equivalent
UNFCCCUnited Nations Framework Convention on Climate Change
ZEDZero Defect Zero Effect (MSME certification/programme) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xx Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxi
Executive Summary
India has set twin goals of becoming a developed, high-income economy by 2047 and achieving
Net Zero emissions by 2070. The industrial sector is at the heart of this effort, as it is a key
driver of economic growth and a major source of greenhouse gas (GHG) emissions. Industrial
growth will surge, as India’s GDP moves toward a projected USD 30 trillion by 2047 as demand
for steel, cement, chemicals and other materials will increase many times, leading to increased
energy use. Industry sector accounts for nearly 24% of India’s total GHG emissions (excluding
emissions from electricity use) in 2020. Major emitters in this sector include steel, cement and
aluminium (the largest contributors), followed by chemicals, fertilisers, and other manufacturing.
Decoupling industrial growth from carbon emissions is imperative for “green growth,” yet this
transition poses a significant challenge given the reliance on fossil fuels for around 83% of
industrial energy.
Modelling Approach
It is in this context, NITI Aayog’s Inter-Ministerial Working Group, constituted for industrial sector
has delved into various facets of industrial energy transition including industrial output, energy
demand across major subsectors: steel, cement, aluminium, textiles, petrochemicals, paper &
pulp, fertilisers, refinery, chlor-alkali and other manufacturing. The comprehensive framework
adopted for modelling industrial sector adopts two scenarios: Current Policy Scenario (CPS)
and Net Zero Scenario (NZS), within which the goal of becoming developed economy has been
kept sacrosanct. The framework integrates granular data on technology options, fuel choices,
and material efficiency, while reflecting on-going national programmes such as the National
Green Hydrogen Mission, renewable energy expansion, and green industrial initiatives.
The modelling of industrial sector is carried out using in-house models India Energy Security
Scenarios (IESS) and TIMES (The Integrated MARKAL-EFOM System) for sectoral activity
projections, fuel switching pathways, and emissions reduction strategies to 2070.
Key Modelling Insights
Multi-fold Industrial Demand Growth Aligned with Viksit Bharat
India’s industrial commodity demand is set to rise multi-fold as urbanisation, infrastructure build-
out, housing, and manufacturing at a scale. By mid-century, India’s per-capita use approaches
levels seen in today’s developed economies. As incomes rise toward high-income economy
levels (around USD 18,000+), per-capita use is projected to converge toward high-income
norms, reaching ~356 kg steel, ~921 kg cement, and ~16 kg aluminium by 2050. While the per
capita use increases, the objective is not to maximise consumption, instead to meet needs Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxii
Executive Summary
sustainably and resource-efficiently. Major transition levers of the industry sector’s low-carbon
transition will include electrification of industrial processes, efficiency aligned with international
best standards, non-fossil fuel-based captive power, improvements in material efficiency and
recycling, and increased use of biomass and green hydrogen.
Energy mix transforms decisively from fossil to clean sources.
Under Current Policy Scenario, fossil fuels remain the dominant energy source with 72% share
by mid-century, and 52% by 2070 (vs 83% in 2025). Under Net Zero Scenario, the energy mix
shifts fundamentally, electrification driven by non-fossil power increases from 16% in 2025 to
55% by 2070. Green hydrogen emerges as a critical fuel for low-carbon transition in steel,
refineries and fertilisers, rising from low-base today to 42 Mt by 2070 in Net Zero Scenario.
Biomass and waste heat recovery also play a crucial role in industrial low-carbon transition. By
2070, fossil share declines to 26% in Net Zero Scenario, and the residual fossil capacity largely
operates with Carbon Capture Utilisation and Storage (CCUS).
Circular economy and material efficiency unlock significant abatement.
Under the enabling conditions for circular economy, in Net Zero Scenario, steel scrap utilisation
increases from 22% to 30% by 2050 and 40% by 2070, thereby reducing reliance on energy-
intensive ore-based smelting processes. Also, in cement, clinker ratio is expected to lower
from 0.67 in 2024 to 0.55 by 2070 with higher use of supplementary cementitious materials
(slag, calcined clay, pozzolans), avoiding nearly 50-100 Mt of clinker annually during 2050-70.
Aluminium recycling serves 40% of 2070 demand while using just 5% of the energy of primary
production. These circular measures decouple growth from raw-material use and emissions.
Technology transition is central to emissions reduction.
Industrial low-carbon transition depends heavily on technologies that are still emerging or not yet
commercial at scale. The study finds that half of the emissions reductions rely on technologies
currently not available at scale such as Green Hydrogen, CCUS, Small Modular Reactors (SMRs)
and high cost electrification solutions such as electricity boilers or Heat pumps. Many of these
solutions are in pilot or demonstration phases today. India is actively exploring these frontiers
through the National Green Hydrogen Mission, which targets 5 Mt of production by 2030;
adoption of new cement blends like Limestone Calcined Clay Cement (LC3), which can cut
cement process CO₂ emissions by 40%; launch of five industrial CCUS test beds in the cement
sector in 2025; and plans to deploy SMRs to supply clean process heat and power for industry. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxiii
Executive Summary
Indicator Snapshot
Table E1: Current Policy Scenario vs Net Zero Scenario – 2050 & 2070
Indicator
Current Policy
Scenario
Net Zero Scenario
2050 2070 2050 2070
Industrial
Output
Steel (
million tonnes)624 821 624 821
Cement (
million tonnes) 1592 1985 1592 1985
Aluminium (
million tonnes) 28 38 28 38
Circularity
Steel - Scrap Utilisation (%) 20% 20% 30% 40%
Cement - Clinker Ratio0.65 0.6 0.62 0.55
Aluminium - Scrap Utilisation (%) 30% 30% 36% 40%
Industrial Energy Demand (Mtoe)980 1150 890 980
Fossil Use (Mtoe/%)700/72% 700/61% 460/52% 250/26%
Electricity Use (Mtoe/%)231/24%340/29% 330/37% 540/55%
Green Hydrogen (million tonnes)8.5 24 22 42
CCUS Deployment (MtCO₂e/yr)Nil Low ~1,000
Investment Requirement (2026–2070, USD trillion)* USD 4.5 trillion USD 6.1 trillion
*Refer IMWG report on Financing Needs (Vol. 9) for investment requirements
Priority Challenges and Policy Suggestions
While low-carbon transition in industry is technically feasible, achieving Net Zero depends
on technologies still emerging or not yet commercial at scale. The transition faces several
systemic barriers that could raise transition costs, prolong fossil fuel dependence, and delay
socio-economic gains. India’s industrial low-carbon transition rests on four structural pillars:
Energy Efficiency, Circularity, Electrification, and Clean Fuels & Technologies, supported by an
enabling ecosystem of finance and skilled labour.
1. Energy efficiency barriers
Energy efficiency is fundamental to low-carbon transition; the International Energy Agency
(IEA) labels it the “first fuel”, yet global efficiency improved by just 1% in 2024. India’s
Perform, Achieve and Trade (PAT) scheme covers 1,333 entities and achieved 8% annual
energy savings, but critical barriers still persist.
Key Barriers: Weak performance monitoring (3-year audit cycle too infrequent), absence of
uniform benchmarks for thermal processes, limited access to affordable finance for Micro, Small
and Medium Enterprises (MSMEs), prevalence of outdated technologies (inefficient motors,
coal-fired boilers), and significant waste heat being vented instead of recovered. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxiv
Executive Summary
Policy Suggestions:
i. Energy Performance monitoring
a. Shift to continuous digital verification using Internet of Things (IoT) and Artificial
Intelligence (AI) with ISO 50001 standardisation
b. Enhance Bureau of Energy Efficiency (BEE’s) benchmarking portal
ii. Financing and Technology modernisation
a. Scale Assistance in Deploying Energy Efficient Technologies in Industries &
Establishments (ADEETIEs) through interest subvention
b. Institutionalise Energy Service Company (ESCO) models in key clusters
c. Treat waste heat recovery as renewable
d. Promote heat pumps for low-temperature applications through viability gap
funding
2. Circular economy and material recovery
Strong reliance on virgin materials drives resource depletion and emissions. India’s circular
economy is expected to reach USD 2 trillion and create 10 million jobs by 2050.
Key Barriers: Low quality of recycled materials, feedstock inconsistency, logistical fragmentation
(transport costs outweigh material value), multiple regulatory layers, limited domestic scrap (India
imported 8.69 Mt ferrous scrap in 2024), global export restrictions and import dependency on
waste processing equipment.
Policy Suggestions:
i. Creating demand for circularity
a. Introduce rigorous Bureau of Indian Standards (BIS) grading standards
b. Notify Green Public Procurement norms
c. Enable Digital Product Passports for traceability
d. Expand Extended Producer Responsibility (EPR) to further products and material
(e.g. textiles, footwear, etc.)
e. Introduction of minimum recycled content guidelines for key sectors
ii. Waste Management
a. Promote aggregation platforms and waste exchange clusters
b. Establish decentralised sorting and pre-processing centres through PPP model
c. Promote unified waste license system via digital single-window
d. Prioritise domestic waste equipment manufacturing
e. Formalise informal workers via verified IDs and training
iii. Import dependency on scrap
a. Rationalise GST and import duties, favouring recycling
b. Promote advance sorting technologies (shredders, zorba, optical sorters).
3. Industrial electrification
Industrial electrification is 16% in 2025 with huge potential to scale. Replacement of fossil-
fuel heat with electric alternatives will not only result in lower emissions but also strengthen
competitiveness. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxv
Executive Summary
Key Barriers: High electricity costs (due to cross-subsidies for domestic use), reliability constraints
(frequent outages force reliance on captive coal plants), technology gaps (electricity-based
high-temperature processes still nascent), skill shortages in EPC and O&M, and high upfront
capital costs for MSMEs.
Policy Suggestions:
i. Ensuring affordable and reliable electricity
a. Rationalise power tariffs reflecting true costs
b. Enforce Time-of-Day pricing
c. Facilitate open-access approvals
d. Scale Renewable Energy Service Company (RESCO) models aggregating demand
e. Deploy Firm Dispatchable Renewable Energy contracts
f. Establish dedicated industrial power feeders for assured 24×7 supply
ii. Technology Readiness and Financing
a. Develop sectoral electrification roadmaps linking temperature ranges to
technologies
b. Provide blended finance for mature electric technologies
c. Include heat pumps and electric boilers in the National Manufacturing Mission
4. New technologies and fuels
Hard-to-abate sectors rely on technologies (Green Hydrogen Direct Reduced Iron (GH₂-DRI),
electric crackers, CCUS), fuels (green hydrogen), and materials (LC3, inert anodes), that
are still at nascent stages. High costs, limited raw materials, fragmented policies, and weak
standardisation hinder investment.
Key Barriers: High technology risks and costs (first-of-a-kind projects face uncertain returns),
limited raw materials (LC3 constrained by poor clay availability), financing constraints, lack of
product taxonomy, weak R&D ecosystem with poor industry-academia linkages, critical mineral
supply risks (Ni, Li, Co, PGMs).
Policy Suggestions:
i. Scale development and deployment of new fuels
a. Government and MDBs to support pilot projects in H₂-DRI, inert anodes, CCUS
b. Create assured offtake platforms such as Sustainable Aviation, Maritime, Steel
Buyers Alliances leveraging Article 6.2/6.4
c. Strengthen climate taxonomies to explicitly include all low-carbon process routes/
technologies, with clear benchmarks, and thresholds
d. Government and industry bodies to roll out Type III eco-labels and rating systems
for key materials
e. Provide Viability Gap Funding and deploy blended finance for technologies which
have high upfront costs and risks
ii. Domestic Manufacturing and R&D Ecosystem
a. Scale up Production Linked Incentive (PLI) schemes to cover the full value chain
of clean technologies
b. Establish R&D centres of excellence with joint ventures between domestic firms,
global providers, and research institutions Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxvi
Executive Summary
iii. Domestic Manufacturing and R&D Ecosystem
a. Identify and create calcined clay clusters to secure raw material supply
b. Strengthen the supply chain for biomass pellets/briquettes through aggregator
incentives and storage infrastructure
c. Secure long-term international offtake agreements for critical minerals
5. Employment, skills, and trade competitiveness
Industrial low-carbon transition requires a skilled workforce and adaptive trade strategy
against emerging global trade regulations including on carbon.
Key Barriers: Skill shortage and job displacement risks in affected regions and sectors, impact
of European Union’s Carbon Border Adjustment Mechanism (CBAM) on Indian steel/aluminium
exports, protective tariffs on input materials, and lack of green export branding.
Policy Suggestions:
i. Employment:
a. Institutionalise Sector Skill Council (SSC)-industry collaboration for continuous
curriculum updates and strengthening certification systems through employer-
led assessments
b. Emphasise on-the-job training in emerging technologies
c. Develop transition skill roadmaps
d. Establish national skills intelligence system
e. Create a worker retraining policy with relocation support and district economic
diversification frameworks
ii. Trade:
a. Accelerate low-carbon transition in export sectors
b. Institutionalise periodic tariff stocktakes
c. Launch “Green Stamp” initiative showcasing environmental footprint
d. Develop standardised and interoperable Life Cycle Assessment (LCA) frameworks
and implement digital product passports
Conclusion
Industrial low-carbon transition represents both a critical challenge and an opportunity. As India
pursues developed-nation status, its industrial sector transition requires success in technology
upgrades, electrification, renewable adoption, resource efficiency, innovative financing,
supportive policies, stronger institutional frameworks, and capacity-building across energy-
intensive and MSME segments. This transformation can position India as a global leader in
sustainable industrialisation, driving competitiveness, creating green jobs, and aligning growth
with climate commitments.
1 1
INTRODUCTION Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 2
Introduction
India is embarking on a historic development journey to achieve the twin objectives of becoming
a developed economy (Viksit Bharat by 2047) and achieving Net Zero emissions by 2070. The
industrial sector lies at the heart of this transformation, serving as a cornerstone of economic
growth while also representing one of the largest sources of Greenhouse Gas (GHG) emissions.
As industrialisation, urbanisation, and rising living standards reshape India’s economy, demand
for materials and energy will increase sharply. With GDP projected to reach USD 30 trillion
(current prices) by 2047, the output of steel, cement, chemicals, and other industrial products
is expected to multiply. Meeting this demand in a manner consistent with Net Zero goals
requires a fundamental shift towards affordable, reliable and low-carbon energy sources, while
simultaneously safeguarding energy security, employment, and social outcomes. India views
this transformation as an opportunity to reshape its industrial landscape. The Honourable
Prime Minister has characterised this moment as a “green industrial revolution”, emphasising
the potential for low-carbon technologies to drive competitiveness and job creation. India
has assumed a leadership role internationally, co-chairing the Leadership Group for Industry
Transition (LeadIT) alongside Sweden to advance the decarbonisation of heavy industries.
Domestic initiatives such as Make in India and related programmes are strengthening clean-
energy manufacturing capabilities, positioning India as an integral part of global value chains
(GVCs) while meeting domestic demand.
A Legacy of Industrial Strength
Historically, India was a major industrial and trading powerhouse. Before colonial disruptions,
the country accounted for roughly a quarter of global textile manufacturing, renowned for fine
cotton and silk clothed markets worldwide. Indian metallurgy was equally distinguished: wootz
steel, widely regarded as the finest in the world in 12th-century records, was exported globally
for weapon-making. India was also a maritime leader. By the 18
th
century, shipyards in Surat,
Bombay, and Calicut were reportedly constructing up to 40% of the world’s ships, reflecting
early integration into global trade and technological networks (Scammell, 2000).
This industrial dominance gradually eroded as colonial policies reshaped production systems
and trade relationships. Over the past few decades, however, a series of structural reforms,
including the Goods and Services Tax (GST), Production Linked Incentive (PLI) schemes, the
Make in India, Startup India, and the National Industrial Corridor Development Programme, have
supported India’s re-emergence as a significant global industrial player. India is now the world’s
second-largest producer of cement, steel and aluminium with cement efficiency being among
the best globally. It is also the second-largest importer of scrap steel, reflecting a growing
emphasis on recycling and reduced reliance on virgin iron ore. Across sectors, manufacturers are
1 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 3
Introduction
increasingly embracing sustainability, with some firms leading global rankings in environmental,
social and governance (ESG) performance. These strengths position the Indian industry to
leapfrog towards low-carbon development pathways.
Emissions and Energy
Industry is the largest end-use energy-consuming sector in India. More than 80% of industrial
energy demand is met by fossil fuels—coal, oil, and natural gas—while electrification remains
limited at around 16%, below the national average of 21% (estimated). Coal is extensively used
in iron and steel production (as coke in blast furnaces), cement manufacturing (as kiln fuel), and
chemical industries. Natural gas plays a critical role in fertiliser production, both as feedstock
for ammonia and as a fuel, and is also used in ceramics and glass manufacturing.
This fossil fuel-intensive profile results in substantial CO₂ emissions. According to India’s
Fourth Biennial Update Report (2024), manufacturing industries and emissions from Industrial,
Processes and Product Use (IPPU) together account for around 24% of gross Greenhouse Gas
(GHG) emissions, excluding emissions from electricity use. Steel and cement are the largest
contributors, followed by aluminium, chemicals, and fertilisers.
Green Technologies and Transition Opportunities
Enabling a low-carbon transition in India’s industrial sector will require unprecedented levels of
technological adoption and innovation. Several critical technologies, such as Green Hydrogen,
Carbon Capture, Utilisation, and Storage (CCUS), electrification of industrial processes, and
Small Modular Reactors (SMRs), are yet to achieve commercial maturity, and India is actively
exploring these pathways. The central challenge is to reduce cost and scale these solutions
from pilot and demonstration stages to mass deployment. Doing so will require supportive
policies, access to finance, and enabling infrastructure such as hydrogen pipelines, CO₂ transport
networks, and grid upgrades.
Indian industry has begun to engage with this transition. More than 127 Indian companies have
committed to Net Zero targets under the Science Based Targets initiative (SBTi), placing India
sixth globally in terms of corporate climate commitments. However, participation among heavy
industrial sectors remains limited: fewer than 10% of major firms in sectors such as power, steel,
and cement have adopted Net Zero targets to date (Seneca ESG, 2024).
Regulatory measures are accelerating momentum. The Securities and Exchange Board of India
(SEBI) now requires the top 1,000 listed companies to disclose Environmental, Social, and
Governance (ESG) metrics under the Business Responsibility and Sustainability Report (BRSR)
framework, including emissions, climate risks, and mitigation efforts. This has strengthened
transparency and accountability. International developments are also shaping incentives. The
European Union’s (EU’s) Carbon Border Adjustment Mechanism (CBAM) applies a carbon
price to imports of steel, cement, aluminium, and other carbon-intensive products. While such
measures underscore the growing importance of emission intensity reduction, they also raise
concerns about unilateral trade actions that may disproportionately affect developing countries
with limited historical responsibility for climate change. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 4
Introduction
Mission LiFE and Societal Engagement
India’s climate strategy extends beyond industry to a people-centric movement. Mission LiFE
(Lifestyle for Environment), launched by the Honourable Prime Minister in 2022, calls for large-
scale behavioural change toward sustainable production and consumption. In the industrial
context, Mission LiFE promotes demand for sustainable products, reinforcing the incentive for
firms to manufacture green goods—from eco-labelled textiles to low-carbon cement (MoEFCC,
2022).
Digital public infrastructure is supporting this transition. The India Energy Stack, currently under
development, is envisaged as an open digital backbone that will support smart grids, electric
vehicle integration, and real-time energy management. Much as the Unified Payments Interface
(UPI) transformed digital finance, the energy data stack is expected to unlock innovation and
transparency in energy use, empowering industries and consumers alike to optimise efficiency
and integrate renewable energy at scale.
With its growing economic influence, India has the opportunity to demonstrate a distinctive
model of “green growth” —one in which industrial expansion aligns with climate stewardship.
An emphasis on quality, innovation, affordability, and sustainability can position India as a
preferred supplier for climate-conscious global markets. By investing in cleaner technologies and
adopting global best practices, India aims to emerge as a trusted and responsible production
hub, delivering on the twin goals of prosperity and planetary well-being. Achieving Net Zero
by 2070 is a formidable task, but with strategic planning, international collaboration through
technology sharing and affordable finance, and broad participation from government, industry,
and communities, India’s industrial transition can set a benchmark for emerging economies.
Institutional Mechanism: Inter-Ministerial Working Group on Industry
The Inter-Ministerial Working Group on Industry is one of the ten working groups constituted
by NITI Aayog to develop a long-term development vision aligned with India’s commitment to
becoming a developed nation by 2047 and to achieve Net Zero emissions by 2070. Collectively,
these groups examine macroeconomic dimensions of the transition, sectoral implications across
industry, transport, power, buildings, and agriculture, requirements for climate finance and critical
minerals, and the social implications of the Net Zero pathway (Figure: 1.1).
Policy Mandates,
Viksit Bharat
Vision and
Working Group
Guidance
Data and
Literature
Review
Industry Specific
benchmarking
(India & Global)
Stakeholder
Consultation
• Academia
• Think tank
• Industry
• Association
• Ministry
Analysis &
Pathway
Modelling
Scenario
modelling
frameworks
(IESS/TIMES)
Decarbonisation
Roadmap
Policy and
Technology
Suggestions
Figure 1.1: Approach for developing the Net Zero Pathway Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 5
Introduction
The Inter-Ministerial Working Group on Industry was mandated to assess the current state and
long-term evolution of India’s industrial ecosystem, covering energy use, emissions intensity,
technology maturity, and investment requirements, and to suggest a comprehensive transition
pathway through 2070. To address these objectives, a structured and collaborative roadmap
development process was adopted.
Composition of the Working Group:
Chair: Dr. V.K. Saraswat, Member, NITI Aayog
Representatives from Ministries/Departments: Steel, Coal, Power, New & Renewable Energy,
Petroleum & Natural Gas, Chemicals & Fertilisers, Heavy Industries, Micro, Small & Medium
Enterprises, Mines, Commerce & Industry, Environment, Forest and Climate Change.
Key institutions: Bureau of Energy Efficiency (BEE) selected central public sector enterprises,
and technical institutions in steel, cement, power, fertilisers, and other energy-intensive industries.
Industry and knowledge partners: Industry associations and sector platforms, along with leading
think tanks and research organisations working on industrial low-carbon transition, technology
pathways, energy systems modelling, and climate policy.
Stakeholder consultations across individual subsectors provided valuable insights into the
deployment of low-carbon technologies, including adoption requirements, key challenges and
opportunities, and the role of research and development in reducing costs, accelerating uptake,
and improving efficiency. Common themes emerged across these consultations, including
sector-specific needs and opportunities, the applicability of decarbonisation pillars, and the
technological advancements required to support long-term emission reduction goals.
The Terms of Reference (ToR) of the Inter-Ministerial Working Group on Industry include the
following:
i. Examine the potential of growth across industrial sub-sectors, including energy
consumption implications, in line with GDP growth and structural economic shifts.
ii. Examine the role of energy efficiency improvements and technology shifts across
industrial sub-sectors.
iii. Examine the impact of shifts to cleaner and alternative fuels and demand-side
electrification on emissions, energy consumption, and energy security, particularly
in hard-to-abate sectors.
iv. Assess the potential of circular economy and resource efficiency to reduce demand
for virgin materials.
v. Assess the potential of CCUS in industrial decarbonisation, particularly in hard-to-
abate sectors.
vi. Examine industrial competitiveness in the context of global developments such as
the Carbon Border Adjustment Mechanism (CBAM).
vii. Examine transition risks faced by micro, small and medium enterprises (MSMEs).
viii. Analyse sources of finance and financing instruments for industrial low-carbon
transition. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 6 2
LANDSCAPE OF THE
INDUSTRY SECTOR
IN INDIA Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 8
2
Landscape of the
Industry Sector in India
India stands at a strategic crossroads in the evolving global industrial landscape. Geopolitical
shifts, the restructuring of global value chains (GVCs), and a global push toward sustainability
are driving demand for resilient, diversified, and low-carbon manufacturing hubs. India is
well-positioned to respond, leveraging its large and young workforce, with over 60% of the
population in the working-age bracket, an expanding domestic market, and a competitive
manufacturing base (MoSPI, 2022). Government initiatives such as Make in India, Production
Linked Incentive (PLI) schemes, and infrastructure modernisation have further strengthened the
country’s industrial competitiveness (IBEF, 2024).
India’s industrial sector is not only a critical engine of domestic economic growth, but also
increasingly embedded in global supply chains across automotive, electronics, pharmaceuticals,
and textiles sectors. As global economies accelerate their transition to Net Zero, the next phase
of industrial development will be defined by innovation, low-carbon transition, and efficient use
of resources.
This presents a dual opportunity for Indian industry: (i) to expand its global economic footprint
while leading the transition to sustainable, resource-efficient industrial practices, (ii) rising global
demand for low-carbon products, circular economy models, and green technologies offers
strong incentives to adopt clean energy, invest in green manufacturing to enhance efficiency.
With the right policy alignment and institutional support, India can emerge as a global leader
of the green industrial revolution, building an economy that is competitive, environmentally
responsible, and aligned with the long-term sustainability goals.
This chapter is structured in three segments. The first segment situates Indian industry in the
global context, outlining its economic contribution, production trends, and emissions footprint.
The second segment presents detailed sectoral deep dives across key industrial sub-sectors.
The final segment explores the major decarbonisation levers shaping the industry’s transition
toward a low-carbon future.
2.1 INDIAN INDUSTRY AND GLOBAL CONTEXT
Globally, industry contributed about 27% to GDP and employed 24% of the workforce in 2021
(World Bank, 2023; 2025) (see Figure 2.1). In the same year, China stood out with 38% of its
GDP and 32% of employment attributed to industry, while South Korea and Japan also reported
higher than the world average contributions of the industrial sector to their economies. In
comparison, in the US and the EU, about 18–22% of GDP and 19–25% of employment came Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 9
Landscape of the Industry Sector in India
from industries (World Bank, 2025). In India, the industrial sector contributed 27% to its Gross
Value Added (GVA) and employed about 24% of the workforce in 2021 (MoSPI, 2025; World
Bank, 2023). Within this, manufacturing accounted for 56.2%, construction 27.3%, utilities 10%,
and mining and quarrying 6.5% (MoSPI, 2025).
0
5
10
15
20
25
30
35
40
45
50
2013 2015 2017 2019 2021
% of total GVA
China
Korea, Rep.
Japan
World
India
European Union
United States
Figure 2.1: Industry (including construction), value added (% of total GVA)
Source: (World Bank, 2023)
2.1.1 Industrial Output: Sectoral Strengths
India is steadily emerging as a key player in global industrial production, especially in the
steel, cement, aluminium and chemical sectors. These industries form the backbone of India’s
manufacturing economy, significantly contributing to GDP and exports (WSA, 2024; IBEF, 2025).
India is currently the world’s sixth-largest chemicals producer and ranks second after China in
steel, cement and aluminium output, accounting for nearly 6% of aluminium, 8% of steel and
over 10% of cement supply globally (WSA, 2024; GCCA & TERI, 2025).
India’s advantages lie in cost-efficient labour, abundant raw materials, and strong domestic
demand driven by urbanisation and infrastructure development. Pharmaceutical exports,
especially generics have underpinned growth in the chemicals sector. Foreign Direct Investment
(FDI) attracted under the Make in India initiative has further strengthened capacity across these
areas (Sharma, 2024).
India experienced significant growth in industrial production between 2000 and 2020 (Figures
2.2 and 2.3). While China remained dominant, producing 61% of steel, 57% of aluminium, 52%
of cement, and 45% of chemicals globally (WEF, 2023), India’s production grew steadily even
as output in G7 countries plateaued (OECD, 2022). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 10
Landscape of the Industry Sector in India
4000
3000
2000
1000
0
Production (Mt)
2000 2010
Steel
2020 2000 2010
Cement
2020 2000 2010
Primary chemicals
2020
G7
China India ROW
Figure 2.2: Materials production of G7 members in the context of global production
(million tonnes)
Source: (IEA, 2022)
Note: ROW = Rest of the World;
The total production of ammonia, methanol, ethylene, propylene, benzene, toluene and mixed xylenes.
70
60
50
40
30
20
10
0
Million Tonnes
200020102020
G7
China India ROW
Figure 2.3: Aluminium production of G7 members in the context of global production
(million tonnes)
Note: ROW = Rest of the World;
Source: (IEA, 2022); (IAI, 2024; NITI Aayog, 2023);
(IAI, 2025)
Looking ahead, the global demand for steel, cement, aluminium and chemicals is projected to
increase by 12-30% by 2050, largely from emerging markets (IEA, 2021). India has a strategic
opportunity to scale sustainably and enhance its role in global value chains. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 11
Landscape of the Industry Sector in India
2.1.2 Energy and Emissions Profile
The industrial sector is a major source of greenhouse gas (GHG) emissions. In 2023, it accounted
for 21.54% of global direct emissions from energy use and industrial processes, with steel, cement,
and chemicals comprising nearly 71% of this (UNIDO, 2024) (see Figure 2.4 and Table 2.1).
Table 2.1: Global and industrial GHG emissions (million tonnes of CO
2
equivalent)
1990 1995 2000 2005 2010 2015 2020 2023
Industry 5974 6215 6404 8097 9746 10483 11026 11408
Global Total32726 33930 36175 41296 45814 48808 49327 52962
Share of
Industry
18.26% 18.32% 17.70% 19.61% 21.27% 21.48% 22.35% 21.54%
Source: (UNIDO, 2024)
India’s industrial emissions profile reflects high material intensity. Roughly 67% of emissions
were from energy use and the balance from processes (MoEFCC, 2024).
29%
27%
15%
29%
Iron and steel
Chemicals and petrochemicals
Cement and lime
Other industrial sectors
Figure 2.4: Contribution of industry sub-sector emissions in 2022 (Globally)
Source: (UNIDO, 2024)
Heavy industries, particularly steel, chemicals, cement, non-ferrous metals, and paper account
for the vast majority of industrial energy use. As India’s economy grows, both output and
energy use are expected to rise substantially. Global forecasts estimate that industrial energy
demand could more than double by 2050, especially in emerging economies (US EIA, 2021).
Managing this growth while cutting emissions is crucial for India’s low-carbon pathway. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 12
Landscape of the Industry Sector in India
2.1.3 Lessons from Global Industrial Trends
India’s trajectory parallels global trends in which countries are simultaneously pursuing industrial
growth, technology upgrades, and emissions reductions, as detailed below:
European Union: Industry remains a top emitter even though emissions fell 29%
from 1990 to 2022 (Eurostat, 2025). Tools like the Emissions Trading Scheme (ETS),
Carbon Border Adjustment Mechanism (CBAM), and Renewable Energy Directive
(RED) are implemented to drive low-carbon transition.
United States: Industrial policy emphasises reshoring and manufacturing investment.
While the Inflation Reduction Act (IRA), Bipartisan Infrastructure Law (BIL), and CHIPS
Act previously allocated significant funds, President Trump’s 2025 administration
has sought to repeal IRA climate provisions and redirect CHIPS subsidies toward
domestic semiconductor production over green industrial decarbonisation (Carlsen
& Gangotra, 2024).
Japan: Focuses on high-tech and automotive sectors. The 2021 Green Growth
Strategy and USD 110 billion (15 trillion yen) Green Innovation Fund support research
and development (R&D) in hydrogen, carbon recycling, and energy storage (JETRO,
2024).
South Korea: With manufacturing at 39% of GDP in 2017, Korea emphasises energy
efficiency, circular economy, and smart factories. Its low-carbon roadmap features
CCUS and Industry 4.0 (Government of the Republic of Korea, 2020).
India shares the global industrial challenges of rising energy demand, emissions intensity, and
green technology integration. But it also holds a distinct opportunity to shape its transformation
early by leveraging PLI schemes and transition platforms to achieve sustainable competitiveness.
2.2 SECTORAL DEEP DIVES: INDUSTRY IN THE INDIAN AND GLOBAL
CONTEXT
This section gives details for the selected sectors, India’s comparative position with global
averages and other countries in terms of production, consumption, per capita consumption,
emissions and sectoral policies for key sectors including steel, cement, aluminium, fertiliser, and
textiles. Less energy intensive sectors like paper and pulp, chlor-alkali, ethylene, refineries, and
MSMEs, are discussed in the Indian context.
2.2.1 Steel sector
Global Context
The global steel industry has expanded rapidly over the past few decades, led by China and
India. Global crude steel production rose from 770 million tonnes (Mt) in 1990 to 1,892 Mt
in 2023 (WSA, 2024) (see Figure 2.5). The Blast Furnace, Basic Oxygen Furnace (BF–BOF)
and Electric Arc Furnace (EAF) processes account for approximately 71% and 29% of global
production, respectively (WSA 2024). The top five producers are China, India, Japan, the USA,
and Russia. Future growth is expected from emerging economies in Africa, South and East Asia,
including India, and Latin America, as demand plateaus or declines in regions such as Europe,
Japan, the USA, and South Korea (WSA, 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 13
Landscape of the Industry Sector in India
Production /Consumption (Mt)
1200
1000
800
600
400
200
0
China
1019
896
141
133
87
53
90 76
45
67
55
3528 3438 32
24
31
20
81
South
Korea
TurkeyUnited
States
Russia GermanyBrazilIndia JapanIran
Production
Consumption
Figure 2.5: Global comparison of steel production and consumption (million tonnes)
Source: (World Steel, 2024) (WEF, 2022) (Hasanbeigi, 2022), For India, Source: (MoS, 2025)
Steel Sector in India
India is the world’s second-largest crude steel producer, with output rising to 152.18 Mt in FY
2024–25 (Ministry of Steel; WSA, 2025). Under the National Steel Policy (NSP) 2017, India targets
a steelmaking capacity of 300 Mt and production of 255 Mt by FY 2030–31, underscoring the
sector’s central role in supporting economic growth.
Finished steel consumption has grown strongly, expanding at a CAGR of 7.6% from around
31 Mt in 2002–03 to about 152 Mt in 2024–25, driven by rapid urbanisation and infrastructure
development. Despite this growth, per capita finished steel consumption in India remains
modest at about 98 kg in 2023–24 (rising to 102.6 kg in 2024–25), less than half the global
average of around 215–220 kg, indicating substantial headroom for future demand as incomes
and investment increase. Steel demand is concentrated in construction (43%) and infrastructure
(25%), followed by engineering and packaging (22%), automobiles (9%), and defence (1%). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 14
Landscape of the Industry Sector in India
160
140
120
100
80
60
40
20
0
BOF EAF IF
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Finished steel consumption
Figure 2.6: Historical production and consumption of steel (million tonnes) (MoS, 2024)
*Steel production route/processes:
BOF: Basic Oxygen Furnace,
EAF: Electric Arc Furnace
IF: Induction Furnace
*Steel Production and Consumption (Milion Tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 15
Landscape of the Industry Sector in India
2023-24
BF
79.70
BOF
61.61
Coal
DRI
41.8
IF
51.1
EAF
31.6
Scrap
33.36
Gas DRI
9.8
62.68
17.03
4.53
6.20
23.04
4.40
9.79
37.19
Million Tonnes, Iron
Million tonnes Steel
Figure 2.7: Technology-wise steel production, 2023-24 (MoS, 2024)
Indian steel production relies on a mix of technologies. The primary routes are: Blast Furnace–
Basic Oxygen Furnace (BF-BOF; the dominant route), Direct-Reduced Iron (DRI) with Electric
Arc Furnace (DRI–EAF; using gas or coal-based reduction), and DRI with Induction Furnace
(DRI–IF; coal-based) (Figure 2.7). A significant contribution of crude steel is from coal based
DRI which is responsible for India’s higher steel sector emission intensity of approximately 2.54
tonnes CO
2
per tonne of crude steel (tCO
2
/tCS), compared to the global average of 1.9 tCO
2
/
tCS in FY 2023-24 (IEEFA & JMK Research 2023).
This diverse mix spans from large integrated plants to small secondary steel mills. These
technology choices also shape energy consumption. For example, the BF-BOF route, which
dominates India’s steel production, averages 27.3 GJ/tonne, substantially higher than global
best practice (20–22 GJ/t). Conversely, scrap-based EAF steel is significantly more efficient at
just 1.4 GJ/t, reflecting alignment with circular economy principles but constrained by scrap
availability (21% share of total production in 2024) (Ministry of Steel, 2024). These contrasts
are evident in the technology/fuel-wise Specific Energy Consumption (SEC) (see Figure 2.8). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 16
Landscape of the Industry Sector in India
30
25
20
15
10
5
0
BF-BOF Coal-based
DRI-EAF
Gas-based
DRI-EAF
Coal-based
DRI-IF
100% scrap
EAF
Hydrogen-based
DRI-EAF
GJ/tonne
Grid electricity Fuel oil GH
2
Non-coking coalGasCoking coal
Figure 2.8: Estimated fuel-wise specific energy consumption
1
The total energy consumed in 2020 and 2025 is 48 Mtoe and 68.8 Mtoe, respectively, accounting
for electricity generation from captive power plants rather than associated fuel consumption.
The detailed fuel mix for 2020 is given in Figure 2.9.
0.65, 1%
1.70, 4%
5.39,
11%
40.57,
84%
Grid electricityCaptive ElectricityGasCoal
Figure 2.9: Energy m ix (Mtoe, %) in steel sector in 2020
To address the steel sector’s low-carbon transition challenges, India is exploring green
Hydrogen as a low-emission pathway for steel. Steelmaking is a global priority for green
hydrogen deployment, with over 200 hydrogen-based projects announced by 2030 (Clean
Energy Ministerial, 2024). India’s National Green Hydrogen Mission targets 5 Mt of annual green
hydrogen production by 2030 (MNRE 2024), with INR 455 crore allocated to pilot hydrogen-
based steelmaking projects (PIB, 2024).
1 Estimated based on the mix of grid electricity and fuel required for the thermal energy and captive electricity for
different technology type. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 17
Landscape of the Industry Sector in India
Key Policies and Initiatives for the Steel Sector
Global PoliciesIndian Policies
Global steel policy is increasingly
shaped by carbon pricing, clean
tech funding, and material efficiency
or circular economy mandates.
The EU ETS applies carbon pricing
to steel producers, while CBAM
imposes tariffs on imported high-
emission steel (ICAP, 2024).
In the United States, the Inflation
Reduction Act (IRA) allocates
substantial funding to support
clean technology initiatives within
the steel industry, promoting the
adoption of low-carbon production
methods (Phadnis, 2024).
Korea steel decarbonisation policies
focus on broad aspects of steel
sector decarbonisation, including
advancing low-carbon technologies
such as Hydrogen-reduction, CCS,
EAF and Steel Scrap; developing
high-value added materials;
enhancing export competitiveness
(InfluenceMap, 2025).
The Clean Steel Partnership, officially
launched in June 2021, seeks to
advance various breakthrough
technologies to produce clean
steel on a large scale by 2030 (EU,
2022). Collectively, these policies
aim to enhance sustainability in the
global steel sector.
Initiatives like the World Steel
Association’s roadmap and global
buyer-led initiatives such as the First
Movers Coalition are reinforcing
demand for green steel.
The National Steel Policy (NSP), 2017
envisions a globally competitive and self-
reliant steel industry. It targets per capita
consumption of 160 kg by 2030–31, aims
to meet domestic demand for high-grade
automotive, electrical, and special steels,
and seeks to reduce coking coal import
dependence from ~85% to ~65%. The policy
further emphasizes expanding global
presence in value-added steel, promoting
energy-efficient and environmentally
sustainable production, ensuring cost-
effective and quality manufacturing, and
achieving global standards in safety, health,
and carbon footprint reduction.
The Steel Research Technology Mission of
India (SRTMI) is a joint initiative of the Indian
steel industry and academia supported by
the Ministry of Steel, to drive innovation
and research in the steel sector and bridge
gaps between industry and academia for
enhanced R&D.
A Green Steel Taxonomy was introduced
with 3-star, 4-star, and 5-star ratings based
on CO₂ intensity (MoS, 2024).
Certifications like LEED (Leadership in
Energy and Environmental Design) and
GRIHA (Green Rating for Integrated Habitat
Assessment) encourage the use of energy-
efficient, low-emission steel in infrastructure
and real estate projects.
The Steel Scrap Recycling Policy (2019)
and Vehicle Scrappage Policy (2022) aim
to enhance scrap availability (IEA, 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 18
Landscape of the Industry Sector in India
Global PoliciesIndian Policies
Countries such as China, Germany,
India, Japan, and Korea have created
policies on circular economy and
material efficiency to boost scrap
availability (OECD, 2024). Under the National Green Hydrogen
Mission, a budgetary support of ₹455 crore
has been allocated to the Ministry of Steel
for implementation of pilot projects for the
use of hydrogen in the iron and steel sector
up to the financial year 2029–30 (NGHM,
MNRE). Under the Mission, Ministry of Steel
has awarded pilot projects in key focus
areas i.e., use of hydrogen in existing Blast
Furnace to reduce coal/coke consumption;
and injection of hydrogen in vertical shaft
based DRI making to partially substitute the
NG/other reducing gas Greening the Steel
Sector in India: Roadmap & Action Plan is
key policy framework issued by Ministry
of Steel (MoS) to guide sector’s transition
towards low-carbon intensity, including
energy efficiency, use of renewable energy
and green hydrogen, material efficiency,
technology shift from coal-based DRI to
cleaner route and CCUS.
Box-1: HYBRIT – Sweden’s Shift Towards Fossil-Free Steel with
Hydrogen
1,2
Green hydrogen is emerging as a key option for reducing emissions in the steel industry.
Sweden is one of the first countries to take large-scale action through the HYBRIT (Hydrogen
Breakthrough Ironmaking Technology) initiative. Under this initiative, three major companies,
SSAB, LKAB, and Vattenfall, are working together to change the Swedish iron and steel
industry by replacing coal with fossil-free hydrogen in the steelmaking process. As part of
this effort, they are also developing large-scale storage systems for fossil-free hydrogen
gas. The HYBRIT initiative has already produced trial batches of fossil-free steel and is seen
as among the earliest realistic steps towards commercial hydrogen-based steel production.
India is exploring similar solutions. While the steel sector in India still relies on blast furnaces,
some pilot projects for hydrogen-based steelmaking have started. For example, Tata Steel
has conducted a trial to inject hydrogen into its blast furnace as a partial replacement
for coal. This marks an early step in India’s move toward low-carbon steel using green
hydrogen.
1 https://www.hybritdevelopment.se/en/
2 Tata Steel Press Release Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 19
Landscape of the Industry Sector in India
Box-2: Clean Steel Partnership (ESTEP 2024)
The Clean Steel Partnership (CSP) was launched in 2021 to help achieve the EU’s
climate neutrality target by 2050. Its main objective is to cut CO
2
emissions from steel
production by 80–95%, with a 50% reduction by 2030. The CSP operates under the
European Green Deal through a public-private partnership. Funding comes from public
sources like Horizon Europe and private industry contributions, aiming to mobilize Euro
2.6 billion (INR 23,400 crore), including Euro 1 billion (INR 9,000 crore) from public
funds. It focuses on advancing clean steel technologies, including hydrogen-based
steelmaking, Carbon Direct Avoidance (CDA), and Carbon Capture and Usage (CCU),
to Technology Readiness Level (TRL) 8. The funding supports demonstration projects
and deployment. Over 100 stakeholders are involved, including EUROFER, ESTEP, and
leading European steelmakers.
Box-3: Carbon Border Adjustment Mechanism (CBAM) (European Union,
2023)
The European Union’s Carbon Border Adjustment Mechanism (CBAM), introduced on
October 1, 2023, imposes levies on imports of carbon-intensive goods such as steel,
aluminium, and fertilisers based on their embedded CO
2
emissions. This mechanism
aims to prevent ‘carbon leakage’ by ensuring that imported products are subject to the
same carbon costs as those produced within the EU.
Key Features:
Transitional Phase (2023–2025): Importers must report the embedded emissions
of covered goods without financial obligations.
Full Implementation (from 2026): Importers will be required to purchase CBAM
certificates corresponding to the carbon price that would have been paid if the
goods were produced under the EU’s Emissions Trading System.
Implications for India (CSEP 2025):
Trade Impact: As a significant exporter of steel and aluminium to the EU, Indian
steel’s cost may increase, potentially affecting its competitiveness.
Compliance Challenges: Indian exporters will need to develop robust mechanisms
for measuring and reporting the carbon content of their products to comply
with CBAM requirements.
Strategic Considerations: India may need to enhance its domestic carbon pricing
mechanisms and invest in low-carbon technologies to maintain market access
and competitiveness in the EU.
CBAM represents a significant shift in global trade dynamics, linking carbon emissions
directly to trade policies. For India, proactive engagement and policy adjustments will
be crucial to navigate the consequent challenges and opportunities. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 20
Landscape of the Industry Sector in India
2.2.2 Cement Sector
Global Context
The cement industry accounts for 13% of global GDP and 8% of global emissions (GCCA & TERI,
2025). With 68% of the global population projected to live in urban areas by 2050, cement
demand will be driven by South and Southeast Asia, Africa, the Middle East, and Latin America
(UN DESA, 2018). China currently produces about half of the world’s cement, followed by India
(see Figure 2.10). India’s per capita cement consumption is approximately 257 kg, less than
half the global average of about 540 kg (GCCA and TERI, 2025), indicating significant growth
potential.
Globally, the cement sector was the third-largest industrial energy consumer in 2022, using 12
Exa Joules (3,333 TWh) or 7.18% of industrial energy (IEEFA & JMK Research, 2023). Around 50-
60% cement production emissions are generated from limestone during the calcination process,
30-40% are from fossil fuel combustion, and the remaining approximately 10% from electricity
use in grinding, material handling, and plant operations. Indian cement plants are relatively
energy-efficient due to early adoption of technologies such as high-efficiency kilns, waste heat
recovery systems, and clinker substitution using supplementary cementitious materials (SCMs)
like fly ash and slag (CEEW, 2023).
2500
2000
1500
1000
500
0
ChinaTurkey Iran BrazilIndonesiaRussia Saudi
Arabia
United
States
IndiaVietnam
ProductionConsumption
Production /Consumption (Mt)
2023
2020
391
375
120
57
107
82
65
69
61
6662 6764 6365 49
47
90
Figure 2.10: Global comparison of cement production, consumption, emissions,
and per capita consumption (million tonnes)
Source: (Worldpopulationreview, 2023) (USGS, Cement - United States Geological Survey 2023, 2023) (USGS, Cement
- United States Geological Survey 2023, 2023) (EUCementAssociation, 2023), For India, Source: (India Climate &
Energy Dashboard) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 21
Landscape of the Industry Sector in India
Cement Sector in India
India is the world’s second-largest cement producer, accounting for over 8% of global installed
capacity and annual output reaching 453 million tonnes in FY25, largely under private ownership,
reflecting a mature, competitive industry (IBEF, 2025). Cement and its products contributed to
0.88% of India’s GDP in 2023-24 (MoSPI, 2025; RBI, 2025). The sector is the fifth-largest contributor
to the Indian economy and supports infrastructure, employment, and socio-economic growth.
It provides one million direct jobs and supports another 20,000 downstream jobs per million
tonnes of cement produced and consumed (CMA, 2022). Rapid urbanisation and government-led
infrastructure initiatives such as PM Awas Yojana–Gramin (PMAY-G), PM Gati Shakti, and Smart
Cities are driving cement demand. As shown in Figure 2.11, from FY 2019 to 2024, domestic
demand grew at about 6% CAGR, recovering strongly after the COVID-19 pandemic with 8%
growth in FY 2022 and about 9% in FY 2023 (MOSPI, 2025). By FY 2024, infrastructure became
the key growth driver, and the momentum is expected to continue through initiatives like Ude
Desh ka Aam Naagrik (UDAN) scheme for regional airport expansion, and ongoing National
Highway and Bharatmala road development projects (Ministry of Finance, 2025).
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
450
400
350
300
250
200
150
100
50
0
Million Tonne
Figure 2.11: Historical production of cement (million tonnes)
On the technology and product mix, nearly 99% of India’s cement is produced using the dry
process with preheater–precalciner kilns, which is significantly more energy efficient than older
wet processes. Blended cements dominate production, with Portland Pozzolana Cement (PPC)
and Portland Slag Cement (PSC) accounting for about 72% of total output (of which PPC alone
accounts for 65%), while Ordinary Portland Cement (OPC) constitutes around 27%. Emerging
low-clinker cements such as Limestone Calcined Clay Cement (LC3) and Portland Limestone
Cement (PLC) are gradually entering the market (Cement Manufacturers Association). The
extensive use of supplementary cementitious materials (such as fly ash and slag, etc.) have
reduced the clinker-to-cement ratio to 0.67 by 2024, better than the global average (0.76),
thereby lowering the sector’s carbon intensity (WRI, 2024).
The cement industry is both energy-intensive and process-intensive, and was responsible for
emissions of approximately 179 MtCO₂e in 2019 (MoEFCC, 2023) and 296 MtCO₂e in 2025 (estimated). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 22
Landscape of the Industry Sector in India
The cement sector consumes around 690-710 kcal/kg (~3.1 GJ/t) of thermal energy and 50
kWh/tonne of electricity for clinker production and 70-80 kWh/tonne of electricity for final
cement production. Operating among the most energy-efficient cement industries globally, the
sector reflects widespread adoption of modern kilns, waste-heat recovery systems, and efficient
operational practices (Confederation of Indian Industry, 2025). The overall energy consumption,
accounting for electricity generation from captive power plants rather than associated fuel
consumption, remains at 18 and 27 Mtoe in 2020 and 2025, respectively, with electricity
contributing about 12% of the energy demand (see Figure 2.12).
Grid electricity Captive ElectricityCoal Pet-cokeBiomass
5.38
30%
0.32, 2%
0.36, 2%
10.21,
57%
1.73,
9%
Figure 2.12: Energy mix (Mtoe, %) in cement sector in 2020
While India’s cement sector is among the most energy-efficient globally, the dominance of
coal and pet coke persists with limited use of alternative fuels (mainly from biomass, industrial
wastes, and Refuse-Derived Fuel (RDF)).
India is also advancing low-carbon cement alternatives. Blended cements such as Portland
Composite Cement (PCC), Portland Limestone Cement (PLC), Portland Dolomitic Limestone
Cement (PDC), Limestone Calcined Clay Cement (LC3), and other multicomponent blends are
in various development stages (GCCA & TERI 2025). Emerging options like Geopolymer and
Super Sulphated Cement require further research and standards. LC3, in particular, is gaining
traction domestically and internationally, and a BIS standard (IS 18189:2023) was introduced
in June 2023 to support its uptake. Its commercial production plants in Europe are expected
to commence by 2025 (RMI, 2023). Major cement producers have also invested significantly
in renewables and waste heat recovery, adding about 600 MW of renewable capacity in the
past decade. India is also taking early steps toward integrating carbon capture, utilisation, and
storage (CCUS) in cement production as part of its long-term low-carbon transition strategies
(JSW Cement 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 23
Landscape of the Industry Sector in India
Box-4: Limestone Calcined Clay Cement (LC3) is a promising low carbon
substitute both in terms of raw material availability and process maturity
Typical Composition of LC3
2
Around 50-60% of emissions in the cement industry come
from clinker production. To reduce this, it is important to bring
down the clinker content in cement. Limestone Calcined Clay
Cement (LC3) cement does exactly that, it brings the clinker
ratio down to about 50%, compared to OPC which typically
has clinker content of around 90-95%. LC3 technology
has been scaled up in parts of Africa and South America,
mainly to reduce clinker imports. India could benefit from
such initiatives as it works to reduce its emissions. India has
enough raw material to support this shift. As of 2015, clay
and limestone reserves stood at 9,294 million tonnes and
16,000 million tonnes respectively (LC3 EPFL, 2024; TERI).
Key Policies and Initiatives for the Cement Sector
As a developing country and among the fastest-growing economies, India has robust cement
demand and long-term potential from infrastructure development (GCCA India & TERI, 2025).
Low-carbon transition policies for the cement sector include clinker substitution, blended cement,
alternative fuels, material and energy efficiency measures, and CCUS. The decarbonisation of
other sectors—power and buildings—also has a major impact on cement sector decarbonisation
(GCCA India & TERI, 2025). Policies promoting low-carbon cement like LC3 reflect India’s
commitment to decarbonise the sector.
Global PoliciesIndian Policies
Global cement policy is increasingly
shaped by carbon pricing, product
standards, and carbon capture
mandates.
The EU Emissions Trading System (EU
ETS) applies carbon pricing to cement
producers, while the EU’s Carbon
Border Adjustment Mechanism (CBAM)
covers cement imports from 2026,
discouraging high-emission production
(ICAP, 2024; EC, 2023).
The Greenhouse Gas Emission Intensity
Target Rules (2025) impose India’s first
legally binding CO₂ intensity targets
on cement plants, requiring reductions
per tonne of output under the Carbon
Credit Trading Scheme (MoP, 2025).
The BIS standard IS 18189:2023
supports LC3 cement, enabling about
30% emissions reduction (BIS, 2023).
2 TARA: Environmental and Resource Assessment for Uptake of LC3 in India’s Cement Mix
Clinker
Calcined clay
Low-grade Limestone
Gypsum
50%
30%
15%
5% Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 24
Landscape of the Industry Sector in India
Global PoliciesIndian Policies
Ireland mandates 30% clinker
substitution in all publicly funded
projects (Kumar, 2025).
The US Buy Clean Initiative (2021)
mandates low-carbon cement use in
federal projects (Kumar, 2025).
China’s government launched a Carbon
Peak Implementation Plan for Building
Materials (2022) to ensure cement sector
emissions peak before 2030 through low-
carbon technologies, energy efficiency,
and cleaner energy use.
In GCCA 2050 roadmap to Net Zero,
leading companies from Global Cement
and Concrete Association have joined
forces to set a collective goal of achieving
carbon-neutral concrete production by
2050.
The ASEAN Federation of Cement
Manufacturers’(AFCM) plan is the
world’s first regional strategy for cement
to guide the Southeast Asian cement
sector in reducing CO
2
emissions
through expanding low-carbon cement,
use of renewable energy, energy
efficiency and deploying CCUS.
The Fly Ash Utilisation Notification
mandates the use of fly ash from thermal
power plants, strengthening clinker
substitution and circular material use
in cement production (MoEFCC, 2021).
Waste Management Rules legally
enable co-processing of municipal,
hazardous, and plastic waste in cement
kilns, supporting fuel substitution and
emissions reduction (MoEFCC, 2016–
2022).
India’s National Taskforce on Alternative
Fuels and Raw Materials (AFR) aims to
facilitate greater adoption of waste-
derived materials (plastic, tyres and
biomass residues) as fuel and substitute
for coal/limestone in energy-intensive
cement sector (Institute of Industrial
Productivity).
2.2.3 Aluminium sector
Global Context
Aluminium’s light weight, corrosion resistance, and recyclability make it integral to modern
industry, particularly in transport, construction, and electrification. Global aluminium production
increased from 45.9 million tonnes in 2006 to 70.7 million tonnes in 2023 (USGS, 2010; IAI
2024). China remains the dominant player and produced around 42 million tonnes in 2023 (59%
of global output), followed by India, which reached a record capacity of 4.1 million tonnes in
2022–23 (BEE, 2024; SMM China, 2025).
Aluminium is a major economic contributor. Globally, it generates USD 73 billion in direct
output and supports 7.5 million jobs (Energy Transition Commission, 2022). In India, though
consumption remains low, aluminium contributes to 2% of manufacturing GDP and supports
nearly 800,000 jobs (NITI Aayog). However, its expansion poses significant environmental
challenges. The sector emits approximately 1.1 billion tonnes of CO₂ annually, nearly 2% of global
emissions and is projected to rise by 50% by 2050 under business-as-usual scenarios (Energy
Transition Commission, 2022). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 25
Landscape of the Industry Sector in India
As global industries commit to Net Zero targets, the share of recycled aluminium is expected
to rise to 45% by 2030 (WEF, 2023). Leading OEMs aim to use 40–80% recycled aluminium,
driving investments in secondary production and scrap supply chains (FICCI, 2024; Energy
Transition Commission 2023).
Primary producers are also investing in low-carbon aluminium (under 4 tCO₂e/t), prioritising
non-fossil electricity, energy efficiency, and carbon capture technologies. Since 60% of emissions
are generated by electricity use, reducing emissions from power supply through solar, wind,
and increasingly, nuclear power is critical. Small Modular Reactors (SMRs), under development
globally, offer promise as a steady, low-carbon power source for energy-intensive industries.
Box-5: Aluminium Dunkerque (France) –
Leveraging Nuclear Power for Low-Carbon Aluminium
3
Located in France, Aluminium Dunkerque leverages a nuclear-powered grid to
significantly reduce its emissions. This model demonstrates how stable, low-carbon
electricity can enable low-emissions aluminium production.
India’s aluminium producers have adopted prebaked anode technology, replacing older
Söderberg methods to improve efficiency and reduce emissions. Emerging technologies such
as inert anodes, carbochlorination, and carbon capture and storage (CCS) are being explored
to further reduce emissions to as low as 0.2 tCO₂/t.
In parallel, there is a growing focus on Scope 3 emissions
4
across the aluminium value chain.
Automakers and construction firms are aligning with global targets to cut emissions by 25–100%
by 2030 reinforcing the need for cleaner supply chains and circular material flows.
Aluminium Sector in India
India is the world’s second-largest producer of primary aluminium, with an output of
approximately 4.2 million tonnes in 2024. However, domestic consumption at 3-4 kg per capita
per year is lower than the global average of 11-13 kg and China’s consumption of over 25-
30 kg (Ministry of Mines, 2025). Demand is expected to grow rapidly due to expansion in
infrastructure, power, transport, packaging and manufacturing activities. The aluminium industry
contributes to roughly 2% of India’s manufacturing GDP and supports nearly 0.8 million direct
and indirect jobs (Kumar, 2025). India’s aluminium market is dominated by primary production
(70–75%). Secondary (recycled) aluminium is only 25–30% of total output (Figure 2.13), lower
than the global average of 40%. Due to low domestic scrap availability, 85-90% of scrap used
in India is imported (Ministry of Mines, 2025).
3 Pioneering Sustainable Aluminium: Aluminium Dunkerque’s Decarbonisation and Partnership Strategy
4 Scope 3 emissions are the indirect GHG emissions that come from a company’s supplier value chain Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 26
Landscape of the Industry Sector in India
Million Tonne
6
5
4
3
2
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
ScrapAluminium Production
Figure 2.13: Historical production of aluminium (million tonnes)
Aluminium production is one of the most energy-intensive processes. Indian primary smelters
consume an average of 20-28 GJ/t of thermal energy (mainly for alumina refining and anode
baking), and 50-51 GJ/t of electricity (for aluminium smelting), totalling around 70-80 GJ/t (≈
1.68 toe/t), higher than the global best practice of 63–65 GJ/t (Sripathy, et.al., 2024). In contrast,
secondary aluminium production requires only 10-10.8 GJ/t (2.8-3 kWh/t), roughly 15% of the
energy of primary smelting, underscoring the critical role of recycling in low-carbon transition
(Raabe et. Al, 2022). The sector’s total final energy consumption was around 6.4 Mtoe in 2020
(Figure 2.14), including both thermal energy and electricity. When fuel consumption for captive
electricity generation is included, the total energy use amounts to 14.38 Mtoe in 2020. The fuel
mix is coal-dominated, with minimal use of RE integration in electricity generation so far.
1.74,
27%
1.12,
17%
3.6,
56%
Grid electricity
Captive Electricity
Thermal Coal
Figure 2.14: Energy mix (Mtoe, %) in aluminium sector in 2020 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 27
Landscape of the Industry Sector in India
This is because aluminium smelting requires continuous, high-reliability power, leading to long-
term reliance on captive coal-based generation amid limited availability of firm renewable
alternatives. Sectoral emissions are projected to be about 135 MtCO₂e in 2025 (around 3.3%
of India’s total GHG emissions). Emission intensity is estimated at 23.5 tCO₂ per tonne, well
above the global average of 16 tCO₂/t. Around 57% of these emissions arise from energy
use, predominantly captive coal power, while the remainder comes from process emissions
associated with carbon anode consumption and Perfluorocarbons (PFCs) releases (CF₄, C₂F₆).
India’s aluminium sector exhibits comparatively high CO₂ intensity, making it a strong candidate
for rapid decarbonisation through clean power procurement, expanded recycling, and the
deployment of inert anode and CCUS technologies, in alignment with India’s long-term Net
Zero objectives.
Key Policies and Initiatives for the Aluminium Sector
The aluminium industry is highly energy-intensive, consuming an average of 14,361 kWh of
electricity per tonne of aluminium produced. Recognising the environmental and energy
challenges associated with producing primary aluminium, India has introduced measures to
enhance scrap recycling to produce secondary aluminium, which uses just 5% of the energy
used in primary aluminium production. In addition, the PAT scheme has driven significant energy
efficiency improvements in the aluminium industry, achieving cumulative energy savings of 2.13
million tonnes of oil equivalent (Mtoe) (BUR 4 Report 2024).
Global PoliciesIndian Policies
The EU’s Carbon Border Adjustment
Mechanism will apply to aluminium
from 2026, levying carbon costs on
imported aluminium.
China included Aluminium in its
national Emissions Trading System in
2024 (as the source of ~60% of global
aluminium) (IEA)
Major producers are piloting
breakthrough technologies – e.g.
inert anode smelting (Canada’s Elysis
project) and electrified alumina refining
– alongside carbon capture to achieve
near-zero-emission primary aluminium.
The Non-Ferrous Metal Scrap Recycling
Framework promotes circularity and
secondary production (PIB, 2025).
The Greenhouse Gas Emission Intensity
Target Rules (2025) impose legally
binding CO₂ intensity reduction targets
on aluminium producers from 2025,
requiring a 2.8%-7.1% reduction in CO
2
per tonne under CCTS (MoP, 2025).
Electricity regulations, including open
access provisions and Renewable
Purchase Obligations (RPOs),
increasingly affect aluminium smelters,
given their high dependence on power
and indirect emissions (MoP; SERCs). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 28
Landscape of the Industry Sector in India
2.2.4 Fertiliser sector
Global Context
The fertiliser industry plays a pivotal role in enhancing agricultural productivity, contributing
significantly to global food security and economic growth. In 2023–24, global fertiliser
production stood at approximately 218 million tonnes. Within fertilisers, urea production reached
approximately 184 million tonnes out of 218 million tonnes of total fertilisers globally, with China
and India contributing around 40% of global urea output. The global fertiliser market, valued at
USD 145 billion in 2023, has grown at a modest 1% annually over the past decade. In contrast,
India’s market, valued at USD 11.32 billion, is projected to grow at a CAGR of 4.2%, reaching
USD 16.58 billion by 2032, driven by rising demand and government subsidies (IBEF, 2024).
Globally, the fertiliser industry contributes to around 1.3% of total CO₂ emissions, and ammonia
production alone consumes 2% of global energy. Enabling low-carbon strategies for the sector
centres on three key pathways: energy efficiency, fuel switching, and green ammonia. Energy
efficiency improvements in urea production can reduce thermal energy demand by up to 10%.
Transitioning to round-the-clock renewable energy (RTC RE) can reduce dependence on coal-
and gas-based captive power. The most promising long-term solution is the adoption of green
ammonia, which addresses nearly 80% of emissions from fertiliser manufacturing (CEEW 2024).
Despite technological improvements, fertiliser production remains highly energy- and emission-
intensive. Ammonia production is the dominant source, accounting for 90% of the sector’s
energy use. The shift from coal to natural gas as the primary feedstock has improved efficiency;
coal usage fell from 2.13 million tonnes in 2016–17 to 0.80 million tonnes in 2023–24. The fertiliser
sector accounts for 31% of India’s total natural gas consumption, driven by urea production,
which increased from 15,429 MMSCM in 2016–17 to 19,400 MMSCM in 2022–23 (BEE, 2024).
Box-6: Scheme Guidelines for implementation of SIGHT Programme
Component II: Incentive for Procurement of Green Ammonia Production (under Mode2A)
of the National Green Hydrogen Mission (NGHM). Mode 2A caters to the requirements
of the fertiliser sector. As per the said Guidelines, the capacity available for bidding
under Tranche I of Mode 2A was 5,50,000 tonnes per annum of Green Ammonia.
Thereafter, Solar Energy Corporation of India (SECI) also issued Request for Selection
(RfS) for selection of Green Ammonia Producers through a cost based competitive
bidding process (Ministry of New and Renewable Energy, 2024).
Fertiliser Sector in India
India ranks as the second-largest consumer and third-largest producer for fertilisers, accounting
for about 20% of global output (CEEW, 2024). In 2023–24, India consumed 60 million tonnes of
fertilisers, including 35.78 million tonnes of urea, 10.97 million tonnes of DAP, 1.64 million tonnes
of MOP, and 11.68 million tonnes of NP/NPK fertilisers. Nutrient use intensity reached 141.2 kg/ha
in 2022–23, with 13 states led by Uttar Pradesh, Maharashtra, and Madhya Pradesh accounting
for 92% of total consumption (FAI 2024). Globally, South Asia and Latin America are expected
to drive fertiliser demand growth through 2027, influenced by climate stress, changing rainfall
patterns, and evolving farming practices (IFASTAT, 2023). By 2023-24, India’s total fertiliser
production reached about 50 million tonnes (Department of Fertiliser, 2025). In 2023-24, India Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 29
Landscape of the Industry Sector in India
imported 17.69 million tonnes of fertilisers, comprising 7.04 million tonnes of urea, 5.56 million
tonnes of DAP, 2.21 million tonnes of NP/NPK, and 2.86 million tonnes of Muriate of Potash
(MOP) (Department of Fertiliser, 2025).
Figure 2.15 shows the historical production trend of major fertiliser production in India
5
. Urea
remains the leading product. Despite its significant production capacity, India remains heavily
import-dependent, particularly for Di-Ammonium Phosphate (DAP), Complex Fertilisers (CFs)
and even urea - due to limited access to key raw materials such as phosphate rock and ammonia.
Urea DAP Complex Fertilisers
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Figure 2.15: Historical production of major fertilisers, (million tonnes)
India’s fertiliser industry is highly emissions-intensive, primarily due to its reliance on grey
hydrogen produced through steam methane reforming of natural gas during ammonia
production. Urea, the most commonly produced fertiliser, requires approximately 0.575 tonnes
of ammonia per tonne produced. DAP and other complex fertilisers consume ammonia to a
lesser extent, at a lower extent of 0.23 tonnes per tonne produced (Baboo, 2015). Ammonia
production and its conversion into fertilisers contribute substantially to GHG emissions, totalling
around 25 million tonnes of CO₂ in 2022–23, 65% of which is attributed to urea alone (Patidar
et. al, 2024). Natural gas is used as both a feedstock and a thermal energy source. Given its
significant emissions footprint, the fertiliser sector is a key focus for India’s industrial low-carbon
transition effort.
Figure 2.16 provides the information on the specific energy consumed in different types of
fertilisers. Energy efficiency has gradually improved, as the average Specific Energy Consumption
(SEC) for urea production has reduced to 17.88 GJ/tonne (treating hydrogen as fuel and
accounting for electricity generation from captive power plants rather than associated fuel
consumption).
5 This output is primarily driven by urea, di-ammonium phosphate (DAP) and other complex fertilisers (OCFs), which
together account for about ~85% of the total production, and used for the purpose of this study.
Million Tonne Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 30
Landscape of the Industry Sector in India
20
18
16
14
12
10
8
6
4
2
0
UreaDAPUrea
Urea DAP Complex Fertilisers
Figure 2.16: Estimated fuel-wise specific energy consumption of major Fertilisers
Key Policies and Initiatives for the Fertiliser Sector
Global PoliciesIndian Policies
Global fertiliser policy is increasingly
shaped by decarbonisation and clean
hydrogen, as nitrogen fertilisers account
for nearly 5% of global GHG emissions
(IEA, 2023).
The EU’s Carbon Border Adjustment
Mechanism (CBAM) covers fertilisers
such as ammonia and nitric acid,
applying carbon costs on high-emission
imports from 2026 (EC, 2023).
Countries are supporting green ammonia
through clean hydrogen policies,
initiatives such as Germany’s H
2
Global
and the U.S. Inflation Reduction Act
are accelerating low-carbon fertiliser
production (BMWK, 2023; US DOE,
2022).
Global initiatives like the Global Fertiliser
Challenge launched at COP27 promote
efficient fertiliser use and low-emission
alternatives to strengthen food security
while reducing emissions (US State
Department, 2022).
The Urea Policy (2015) and the Perform,
Achieve and Trade (PAT) scheme
have driven energy efficiency in urea
production, delivering ~0.78 Mtoe energy
savings in PAT Cycle 1 (BEE, 2017).
The National Green Hydrogen Mission
prioritises fertiliser production for green
hydrogen and green ammonia adoption,
supporting pilot projects and future
blending mandates (MNRE, 2023).
The PM-PRANAM scheme incentivises
states to reduce chemical fertiliser
consumption by sharing 50% of subsidy
savings to promote organic and bio-
fertilisers (PIB, 2023).
Mandates such as Neem-Coated Urea
and the promotion of nano-fertilisers
aim to improve nutrient-use efficiency
and reduce emissions from fertiliser use
(MoC&F, 2015; IFFCO, 2023).
Giga Joules Per Tonnes (GJ/t) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 31
Landscape of the Industry Sector in India
2.2.5 Textile sector
The global textile sector is vital to manufacturing, employment, and trade, employing over 75
million people and contributing USD 2.4 trillion to global manufacturing output. In 2022, fibre
production reached 116 million tonnes, driven largely by the boom in fast fashion. Valued at USD
1.83 trillion in 2023, the industry is projected to grow at a CAGR of 7.4%, reaching USD 3.04
trillion by 2030. Asia dominates global production, with China, Bangladesh, and India together
accounting for over 60% of global textile output (KPMG, 2021).
While textiles serve diverse applications including interior furnishings, automotive components,
agri-textiles, and hygienic materials, clothing remains the primary driver of demand, accounting
for 60% of total fibre consumption. China alone contributed to 35.6% of global textile exports
in 2020, valued at USD 276 billion (Filho et al. 2022). India is the world’s 6th largest exporter
of textiles and apparel, with a 3.91% share in global trade 2023-24. Domestically, the sector
contributes to 2.3% of GDP and 13% of industrial production, underscoring its strategic
importance to the economy (PIB, 2025).
Textile production is highly energy and resource-intensive. Wet processing, including dyeing
and chemical treatments, accounts for nearly 38% of total energy use (Minajigi, S.N., 2019).
Globally, the sector contributed to around 10% of industrial emissions in 2022–23, releasing an
estimated 1.7 billion tonnes of CO₂e (ILO 2022). In India, the sector emitted approximately 45
million tonnes of CO₂ in 2025 (estimated).
Globally, the industry is transitioning towards closed-loop production, CO₂-based waterless
dyeing, and sustainable certifications such as OEKO-TEX, GOTS, and Bluesign. Circular business
models and eco-labelling are becoming central to both brand strategy and regulatory compliance,
reflecting rising consumer awareness and tightening environmental standards (Durand, 2025).
Textile Sector in India
India’s textile and apparel industry is one of the country’s oldest and most significant industrial
sectors, contributing to around 2.3% of GDP and to over 12% of export earnings (PIB, 2025).
It provides direct employment to more than 45 million people, making it the second-largest
employer after agriculture (PIB, 2025). India’s textile market, valued at USD 174 billion in 2023,
is expected to grow at a CAGR of 11.98% to USD 350 billion by 2033, propelled by rising
domestic consumption, growing export demand, and supportive policy initiatives such as the
Production Linked Incentive (PLI) scheme. South and Southeast Asia are projected to remain
the growth centres for global demand, buoyed by low labour costs, expanding e-commerce,
and rising consumer interest in sustainable fabrics like organic cotton and recycled polyester
(Ministry of Textiles, 2024).
With strong policy support, rising domestic demand, and expanding export opportunities, the
industry has grown at an estimated 10.2% CAGR since 2016, positioning India as the world’s
second-largest textile producer and a major participant in global trade (at about 4% share)
(IBEF, 2023; PIB, 2025). However, domestic textile consumption remains low at around 5 kg per
capita annually, compared to the global average of 15 kg, indicating significant growth potential
with rising incomes and urbanisation (Gupta, 2025). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 32
Landscape of the Industry Sector in India
Man-Made FibreNatural Fibres (Cotton)
Million Tonnes
9
8
7
6
5
4
3
2
1
0
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Figure 2.17: Historical production of textile, (million tonnes)
Historically, India’s textile base has been dominated by cotton, with cotton fibre accounting for
75–80% of total fibre consumption in the past. However, a structural shift toward man-made
fibres (MMFs) such as polyester, viscose, and technical textiles is underway. By 2022–23, MMFs
made up about 27% of domestic fibre output, up from 19% in 2016–17, reflecting diversification
toward more durable, affordable, and performance-oriented materials. This transition aligns with
global trends, where synthetics account for 72% of fibre consumption. While this shift supports
export competitiveness, it also raises energy and emissions intensity, as MMF production requires
higher energy inputs and dependent on petrochemical feedstocks, in contrast to cotton’s lower
footprint as an agricultural resource (UNCTAD, 2025; IBEF, 2023).
Structurally, the sector is highly fragmented and decentralised, comprising a mix of large
integrated mills and a vast number of MSMEs engaging in spinning, weaving, knitting, dyeing,
and garment manufacturing. Around 95% of fabric production comes from small and informal
units, which account for about 80% of installed capacity located in clusters such as Surat
(synthetics), Tirupur (knitwear), and Ludhiana (woollens) (Gupta, 2020). While this fragmentation
provides broad employment, it also constrains technology modernisation and energy efficiency
upgrades, as smaller enterprises often rely on outdated equipment, automate less, and rely on
fossil-fuel-based heat sources.
The sector’s final energy consumption (accounting for electricity generation from captive power
plants rather than associated fuel consumption) has risen from 6.6 Mtoe in 2020 to 8 Mtoe
in 2025. Among processes, finishing (which includes dyeing, drying, and washing) is the most
energy-intensive stage, consuming about 43% of total energy, of which 73% is met by coal.
Spinning accounts for roughly 24% of energy use, and is largely electricity-driven (72%), while
weaving and knitting together represent around 15% energy consumption, mainly based on
electricity (Vasudha Foundation, 2025). Accordingly, the fuel mix comprises 42% coal, 40% grid
electricity, and 12% biomass (see Figure 2.18). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 33
Landscape of the Industry Sector in India
Grid electricity
Non-coking coal
Captive Electricity
Fuel oil
Biomass
0.79,
12%
0.40,
12%
2.74,
42%
2.12,
32%
0.54,
8%
Figure 2.18: Energy mix (Mtoe, %) in textile sector
Beyond CO₂, textile processing generates substantial wastewater and chemical pollution,
particularly from dyeing operations. Addressing energy efficiency, fuel switching, and cleaner
production technologies will be crucial to ensure sustainable growth as domestic and export
demand continue to rise.
Technological innovation is transforming the industry. Globally, players are adopting Industry
4.0 solutions such as digital printing, AI-enabled quality control, and IoT-driven production
optimisation. India has seen similar progress, particularly among large and export-oriented
enterprises. However, the sector remains largely composed of MSMEs, many of which operate
informally in clusters like Surat, Tiruppur, and Panipat. These units continue to rely on outdated
technologies and manual processes, limiting their productivity and environmental performance.
To address this, the Government of India has launched the National Technical Textiles Mission to
foster innovation and investment in high-performance textiles, including agro-textiles, medical
textiles, and protective gear, positioning India as a global hub for technical textiles (Ministry of
Textiles 2022). Environmental stewardship is also being promoted through targeted schemes. The
Ministry of MSME’s Zero Defect Zero Effect (ZED) certification encourages small manufacturers
to adopt cleaner production and resource-efficient practices (MoMSME). In major clusters like
Tiruppur and Surat, collective mitigation efforts such as Common Effluent Treatment Plants
(CETPs) are supporting compliance with pollution control norms. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 34
Landscape of the Industry Sector in India
Key Policies
The textile industry consumes about 1.2 million tonnes of oil equivalent in energy annually
(Gunturu 2022). Several policies like the PAT scheme were implemented, resulting in 0.33 Mtoe
of energy saved between 2012 and 2022 (BUR 4 Report 2024). A push for renewable energy
adoption is driving further efforts to decarbonise the sector. India is also accelerating sustainable
transformation through flagship initiatives. The PM MITRA scheme establishes integrated textile
parks with common effluent treatment plants and renewable energy supply to reduce the
environmental footprint.
Global PoliciesIndian Policies
EU adopted a Strategy for Sustainable
and Circular Textiles (2022) aimed
at making textiles durable, repairable
and recyclable by 2030 – including
eco-design requirements, minimum
recycled fibre content, and mandatory
Extended Producer Responsibility for
textile manufacturers. Further, the EU
has introduced European Sustainability
Reporting Standards (ESRS) and
Ecodesign for Sustainable Products
Regulation (ESPR) to incentivise
durable and recyclable textiles that
can promote the circular economy
(Alchemie 2024). The Ministry of Textiles has established an
Environmental, Social, and Governance
(ESG) Task Force to guide the sector
toward sustainable practices, including
recycling and resource efficiency
(Outlook 2024).
The National Technical Textile Mission
(NTTM) aims to promote innovation in
high-performance and durable textiles,
supporting sustainability and global
competitiveness. The Textile Policy
2024 aims to modernise the textile
sector, promote sustainability, foster
innovation, and expand India’s presence
in global markets.
California’s Responsible Textile Recovery
Act mandates the recycling of textiles.
France’s Anti-Waste Law for a Circular
Economy (2020) bans the destruction
of unsold clothing.
Several countries have textile labelling
policies (the EU’s Digital Product
Passport), creating demand-side
pressure for sustainable production,
with increasing robustness of standards
to prevent greenwashing.
Green financing from SIDBI and IREDA
enables MSMEs to access capital for
energy-efficient technologies and
renewable energy integration.
Maharashtra government’s Integrated
and Sustainable Textile Industry Policy
(2023-28) (GoM, 2023) offers capital
subsidies to textile units for setting
up solar power projects, promoting
renewable energy adoption within the
industry. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 35
Landscape of the Industry Sector in India
2.2.6 Paper & Pulp
India’s paper and pulp industry plays a vital role in supporting sectors such as education,
publishing, packaging, and sanitation. India is among the top 5 paper-producing countries
globally (CPPRI, 2022). The sector is highly fragmented, comprising large integrated mills,
medium-sized mills, and numerous small units. India has over 900 paper units with an installed
capacity of nearly 29.11 million tonnes, of which around 538 mills are operational with a total
operating capacity of approximately 25.28 million tonnes (CPPRI, 2022). In 2021–22, actual
production was around 22.43 million tonnes (NITI Aayog). As shown, total paper and pulp
output grew at a CAGR of 5.4% between 2010–11 and 2021–22 (Figure 2.19), with production
dominated by Recycled Fibres (RCF)-based mills (75%), followed by Wood-based (19%) and
Agro-based (6%) routes (IPMA).
25
20
15
10
5
0
2010-112014-152018-192012-132016-172020-212011-122015-162019-202013-142017-182021-22
RCF-BasedAgro-BasedWood-Based
CAGR of 5.4%
Million Tonnes
Figure 2.19: Historical production of paper and pulp through different routes
(million tonnes)
With India’s per capita paper consumption (around 16 kg/capita) significantly below the global
average (around 57 kg/capita), the market offers substantial room for expansion. Packaging
paper and board, in particular, have emerged as the fastest-growing segments due to the rise
of online retail and food delivery services. To meet this demand, several mills have expanded
capacities and invested in modern technologies.
However, this growth has also increased pressure on natural resources, especially in terms of
energy, water, and raw materials. The industry is energy- and water-intensive, traditionally reliant
on coal-based captive power and virgin raw materials like wood and agro-residues. In terms of
average energy consumption, wood-based and agro-based paper production consume similar
thermal energy of 27.3 GJ/t, with electrical energy use of 5.22 GJ/t and 4.5 GJ/t, respectively,
while RCF-based production is significantly less energy-intensive, requiring only 11.3 GJ/t of
thermal and 2.61 GJ/t of electrical energy (Figure 2.20) (Shakti Foundation). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 36
Landscape of the Industry Sector in India
RCF-Based
Thermal EnergyElectrical Energy
Agro-BasedWood-BasedSpecific Energy Consumption (GJ/t)
40
30
20
10
0
Figure 2.20: Estimated specific energy consumption of paper and pulp industry
6
(GJ/t)
2.2.7 Ethylene
Petrochemicals are energy-intensive and contribute significantly to environmental pollution and
greenhouse gas (GHG) emissions. Globally, the petrochemical sector has a significant carbon
footprint, accounting for about 17% of industrial carbon-dioxide emissions (Cullen et al., 2022).
While these emissions come from chemical reactions, high-temperature heat generation, energy
conversion processes, and end-of-life treatments, additional emissions are also produced during
the use phase and from upstream oil and gas operations. Naphtha and natural gas are important
feedstocks for manufacturing petrochemicals.
In India, the petrochemical sector has witnessed exponential growth. Considering the diversity
and complexity of the petrochemical industry, this study is focused on ethylene, which is the
basic chemical building block for daily-use products, such as plastics and textiles. Ethylene is
produced conventionally through the steam-cracking process from a range of hydrocarbon
feedstocks like naphtha and ethane. Steam cracking is a highly endothermic process, requiring a
significant input of heat, typically reaching temperatures around 750°C to 900°C, to break down
large hydrocarbon molecules into smaller ethylene and propylene molecules (Haribal, 2018).
This makes steam cracking one of the most energy-consuming processes in the petrochemical
industry.
In the last 21 years (from 2002-03 to 2023-24), ethylene production in India grew at a CAGR
of approximately 4.7%, driven by increasing domestic demand for downstream products such
as plastics, packaging materials, synthetic fibres, and chemicals. Total ethylene production in
2023-24 was approximately six million tonnes; however, per capita production was only about
4.5 kg, compared to the global average of approximately 28 kg per capita (Department of
Chemicals and Petrochemicals, Ministry of Chemicals and Fertilisers, 2025).
6 Estimated based on the mix of grid electricity and fuel required for the thermal energy and captive electricity for
different technology type. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 37
Landscape of the Industry Sector in India
7
6
5
4
3
2
1
0
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
Million Tonnes
Figure 2.21: Historical production of ethylene (million tonnes)
Specific Energy Consumption
The naphtha route accounts for around 44% and the ethane route for about 55% of current
ethylene production. The naphtha route for ethylene production consumes 25.7 GJ/t of thermal
energy, 0.6 GJ/t of electrical energy, and 148.53 GJ/t from feedstock. The ethane route requires
17 GJ/t of thermal energy, 0.7 GJ/t of electrical energy, and 62.4 GJ/t from feedstock
7
(Figure
2.22).
200
180
160
140
120
100
80
60
40
20
0
Naphtha RouteNatural Gas Route
Fuel Consumption in Ethyelene (GJ/t)
Thermal Energy Electrical Energy Feedstock
Figure 2.22: Estimated fuel consumption in ethylene production (GJ/t)
7 Based on Industry consultation Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 38
Landscape of the Industry Sector in India
2.2.8 Chlor-Alkali
The chlor-alkali industry is a cornerstone of the global chemical sector, enabling a broad spectrum
of industrial and consumer applications through the production of key inorganic chemicals such
as caustic soda (sodium hydroxide), soda ash (sodium carbonate), and liquid chlorine. These
chemicals are critical inputs across various sectors. Caustic soda is used extensively in alumina
refining, paper and pulp production, textiles, soaps and detergents, and water treatment. Soda
ash serves as a key raw material in the manufacture of glass, synthetic detergents, and sodium-
based chemicals, and is also used in water softening. Liquid chlorine is used in the production
of PVC, chlorinated solvents, bleaching agents, disinfectants, and plays a crucial role in water
purification and sanitation.
Globally, the chlor-alkali sector produces over 80 million tonnes of caustic soda and over 70
million tonnes of soda ash annually, with significant concentration in regions like China, the U.S.,
and the EU (Prismane Consulting, 2025). India is among the top five producers of chlor-alkali
products, with caustic soda production over 3.6 million tonnes in 2024 and soda ash production
at approximately 2.9 million tonnes (Department of Chemicals and Petrochemicals, Ministry of
Chemicals and Fertilisers, 2025). Liquid chlorine, a byproduct in caustic soda production, is also
produced in significant quantities and plays a vital role in multiple downstream industries. The
production of one tonne of caustic soda typically yields around 0.7 tonnes of chlorine, usually
in liquid form (BEE). Figure 2.23 presents the historical production of Chlor-Alkali products in
India. In last twenty two years (from 2001-02 to 2023-24), Caustic Soda demand grew at 3.9%
CAGR due to its rising use in textiles, alumina, and water treatment, supported by urbanisation
and industrial expansion. Soda ash grew at a CAGR of 2.2%, driven by consistent demand from
glass, detergent, and chemical industries.
Million Tonnes
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
10
9
8
7
6
5
4
3
2
1
0
Soda Ash
Caustic Soda Liquid Chlorine
Figure 2.23: Historical production of chlor-alkali products (million tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 39
Landscape of the Industry Sector in India
Caustic Soda industry also saw a huge transformation from mercury to membrane technology
(Electrolysis of brine), which is eco-friendly and energy efficient (UN Environment, 2017). In this
process, almost 70% energy is consumed by the electrolyser (BEE). In Caustic Soda production,
the share of thermal energy is 42% with rest being electric. In case of Soda Ash, which uses
solvay and dry lime process for production, the share of thermal energy is ~94% .
The average specific energy consumption in 2025 for Soda ash is 8.54 GJ/t (8.00 GJ/t thermal
and 0.54 GJ/t electrical), while the same for caustic soda is 15.50 GJ/t (comprising 6.50 GJ/t
thermal and 9.00 GJ/t electrical), as shown in Figure 2.24.
Low-carbon transition of the Indian chlor-alkali sector includes phasing out mercury-based
technology through a shift to membrane-based technology, improving process automation,
energy efficiency and electrification using renewable energy. As India pursues self-reliance in
chemicals manufacturing under initiatives like Make in India and Aatmanirbhar Bharat, the chlor-
alkali sector is set to play a central role in meeting domestic industrial needs while transitioning
toward a more sustainable and circular production model.
GJ/tonne
18
16
14
12
10
8
6
4
2
0
Soda AshCaustic Soda
Specific Energy Consumption
Thermal Energy Electrical Energy
Figure 2.24: Estimated specific energy consumption in chlor-alkali products (GJ/t)
While green hydrogen-based ammonia offers transformative potential, the carbon requirement
in urea synthesis complicates a complete transition. Still, adopting green ammonia, especially
with external CO₂ sourcing, could make the industry net carbon-negative.
2.2.9 Refinery
India is heavily reliant on imported crude oil to meet its energy demands, importing over 87%
of its crude oil requirements. In 2023-2024, India imported approximately 234 million tonnes
(Mt) of crude oil, primarily from Iraq, Saudi Arabia, Russia, and the UAE. However, in the refining
sector, India has steadily positioned itself as one of the world’s leading refining hubs. As of 2025,
India operates a refining capacity of about 258 million tonnes per annum (Mtpa), equivalent
to about 5 million barrels per day. This places it as the fourth-largest refining country globally,
after the United States, China, and Russia. As shown in Figure 2.25, the refinery capacity in the
last 23 years has grown with a CAGR of 3.6% (PPAC; PIB, 2025). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 40
Landscape of the Industry Sector in India
Refinery Capacity (Million Tonne)
300
250
200
150
100
50
0
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
Figure 2.25: Historical trend of refining capacity in India (million tonnes)
Indian refineries process a broad range of crude qualities and maintain relatively high levels of
capacity utilisation, averaging over 90%, which is significantly above the global average (PIB,
2025). This operational efficiency, combined with a growing domestic demand for transport
fuels and petrochemicals, has made India one of the few countries where refining capacity
continues to expand even as the global refining industry contracts in response to the energy
transition. Figure 2.26 shows the historical trend of production of various petroleum products
in India.
300
250
200
150
100
50
0
2012-132013-142014-152015-162016-172017-18 2018-192019-202020-212021-222022-23
Petroleum Product Production (Million Tonne)
LPG Naphtha ATF SKO HSD LDO Lubes FO LSHS Bitumen Others*MS
Figure 2.26: Historical production of various petroleum products (million tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 41
Equivalency factors considered in this study for the conversion of crude oil to oil products
(Diesel, Petrol, ATF, LPG, Petcoke, Fuel oil, Naphtha, Kerosene) are provided in Annexure-VI.
Despite its growth, the sector faces significant sustainability and climate-related challenges.
India’s refining sector accounted for roughly 2.8% of the country’s total greenhouse gas (GHG)
emissions in 2020. As refinery throughput grows, these emissions are expected to rise if no
mitigation strategies are deployed. One of the major contributors to these emissions is the
widespread use of grey hydrogen, produced from steam methane reforming (SMR), for refinery
processes such as hydrocracking and desulphurisation.
Specific Energy Consumption
The Indian refinery industry is among the energy-intensive sectors due to the processing of
heavier and more complex crude slates. The electricity and steam consumption of refineries
typically accounts for 1.6 GJ/t of crude oil processed. In addition to electricity, hydrogen
consumption is a critical component of refinery energy use, averaging 8-8.5 kg of hydrogen
(0.95 GJ) per tonne of crude oil, depending on the degree of refinery integration and complexity.
Higher hydrogen demand is driven by extensive use of hydrotreating and hydrocracking units,
which are necessary to remove sulphur and other impurities.
Beyond electricity and hydrogen, refineries also consume substantial thermal energy, amounting
to approximately 1.47 GJ/t of crude oil processed, largely for process heating and steam
generation. Steam used in refineries is obtained from co-generation in power plants. At present,
a significant share of this electricity, steam, and thermal energy demand is met through internal
energy sources, including the combustion of refinery fuel gas, purge gas, synthesis gas from
grey hydrogen production, and other own petroleum products in captive power plants, boilers,
and furnaces. The consumption of electricity, hydrogen and thermal energy tend to increase with
deeper conversion, higher product quality requirements, and greater integration of refining and
petrochemical operations. Figure 2.27 shows the electricity and thermal energy consumption
from various fuels and hydrogen consumed for each metric tonne of crude oil processed.
Fuel Consumed in Refineries (GJ/t)
Petcoke/
Coal
Fuel for Electricity/SteamFuel for Thermal EnergyHydrogen
Diesel/Fuel
Oil
Petcoke/
Coal
Syn Gas/
Natural Gas
Diesel/Fuel
Oil
Purge Gas/
LPG
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Figure 2.27: Fuel consumption in refinery sector in India (GJ/t) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 42
Landscape of the Industry Sector in India
The key elements to decarbonise this sector include the gradual replacement of grey hydrogen
with green hydrogen, produced through water electrolysis powered by renewable energy. The
sector is also focusing on increasing energy efficiency, deploying carbon capture, utilisation,
and storage (CCUS) technologies, and integrating renewable energy into refinery operations.
2.2.10 Other Energy-Intensive Sectors: MSME sector
Following key industrial sectors like steel, cement, aluminium, fertilisers, and textiles, Micro,
Small, and Medium Enterprises (MSMEs) represent a significant and diverse segment of India’s
industrial landscape. Globally, MSMEs span energy-intensive sub-sectors including textiles, pulp
and paper, chemicals, bricks, glass, pharmaceuticals, leather, food processing, forging, and
foundries, all of which contribute notably to industrial emissions.
MSMEs comprise 90% of all businesses worldwide, contribute to 50% of global GDP, and
provide 70% of global business-sector employment (ICSB 2024). In advanced economies,
MSMEs account for 80% of employment in professional services and 92% in construction, while
contributing relatively less to value addition. In emerging economies, they dominate trade (83%
of employment) and manufacturing (71%), playing a vital role in job creation despite limited
value capture (McKinsey 2024).
India is home to an estimated 63.3 million MSMEs, accounting for 30.1% of GDP, over 250
million jobs, and 45.7% of the country’s exports. The manufacturing MSMEs alone employ 36
million people across nearly 20 million units, representing 57% of all manufacturing employment
(FICCI, 2023; MoMSME, 2024). The sector also contributes to approximately 25% of industrial
energy consumption and emits an estimated 135 million tonnes of CO₂ in 2022 (FICCI, 2023;
MoMSME, 2024).
Textiles (19%), paper (13%), steel re-rolling (8%), forging (8%), and foundries (9%) collectively
account for nearly 60% of MSME emissions (Figure 2.28). Less prominent sub-sectors, including
chemicals, pharmaceuticals, and leather, contribute another 35%. Fuel-wise, emissions are
primarily driven by electricity (47%) and coal (43%), which together account for 90% of total
emissions. The continued use of outdated equipment, such as inefficient furnaces, motors, and
boilers, significantly worsens the sector’s carbon footprint (BEE, 2019).
Sectoral Emission DistributionFuel-wise Emission Dependence
Textile,
19%
Paper,
13%
Forging, 8%
Petcoke, 2%
RE Electricity, 0%
Furnace Oil, 4%
PNG, 4%Biomass, 0%
Firewood, 0%
Agro. Residue, 0%
Steel Rerolling, 8%
Foundry, 9%Chemical, 1%
Food Processing, 3%
Pharma, 1%
Leather, 1%
Glass, 1%
Brick, 1%
Others,
35%Coal,
43%
Electricity
47%
Figure 2.28: Emission distribution across Indian MSME sectors
Source: (BEE, 2018) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 43
Landscape of the Industry Sector in India
Globally, enterprises with 5–99 employees generate over half of net employment creation.
However, despite their economic significance, MSMEs’ environmental footprint remains poorly
documented. Existing evidence indicates they account for a sizable share of global carbon
emissions and energy use. For instance, SMEs generate 63% of business-driven direct carbon
emissions in the EU (OECD 2023), while the OECD estimates that SMEs consume 13% of global
energy and one-third of industrial and service-sector energy (OECD 2023).
In India, cost considerations often overshadow environmental concerns. As a result, investments
in energy efficiency, renewable energy, or pollution control are typically deprioritised. However,
low-carbon transition, particularly through reduced fossil fuel consumption, offers dual benefits
of emissions reduction and cost savings. Implementing energy-efficient (EE) technologies can
enhance competitiveness, improve energy security, and reduce operational costs (TERI, 2022).
Recognised as the “first fuel” of clean energy transitions, energy efficiency offers quick, cost-
effective mitigation of CO₂ emissions. Technology upgrades and operational improvements can
lower both emissions and energy intensity. Several incentives, including accelerated depreciation
and credit-linked subsidies, are available to MSMEs investing in EE technologies, with payback
periods ranging from one to 5 years. In addition, switching to cleaner fuels such as biomass,
biofuels, LPG, PNG, and adopting process electrification can reduce dependence on grid
electricity and high-emission fuels like diesel (Ministry of Power, 2025; IEA, 2025).
Government efforts at the central and state levels have introduced multiple schemes to support
MSME transition, ranging from financial assistance to resource efficiency programs (MoMSME
2022; MoMSME):
Financial Assistance:
MSE GIFT (Green Investment and Financing for Transformation): provide
concessional finance to MSME for adopting green technologies such as solar roof
top, solar pumps, small hybrid solar-wind system, small off-grid wind system, and
waste management, biogas plants from organic waste, etc.
CGTMSE/CGSS (Credit Guarantee Fund Trust for Micro and Small Enterprises/
Credit Guarantee Scheme for Startups): facilitates collateral-free credits to Micro
and Small Enterprises by providing guarantee cover.
Resource Efficiency
MSE SPICE (Scheme for Promotion and Investment in Circular Economy):
empowers MSEs to adopt sustainable, resource-efficient and eco-friendly practices.
Digital Transformation
Trade Receivables Discounting System (TReDS): an electronic platform, regulated
by RBI, to help MSMEs convert their unpaid invoices into cash by connecting them
to multiple financiers.
Adoption of greener technologies and fuels not only enables access to low-carbon markets
but also promotes inclusive economic growth through higher profits, business expansion, and
employment generation. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 44
Landscape of the Industry Sector in India
Targeted interventions to reduce MSMEs’ Scope 1 and Scope 2 emissions are critical. Enhancing
energy efficiency, increasing green electricity uptake, and transitioning to alternative fuels
can serve as key levers. However, low adoption persists due to multiple challenges, including
limited technical capacity, constrained manpower, and a predominant focus on production
and marketing. MSMEs require external support to access cutting-edge technologies, technical
know-how, and proven best practices. Figure 2.29 outlines the key barriers to energy efficiency
and clean energy adoption in India’s MSME sector (Mitra, 2023).
Energy EfficiencyGreen Electricity (GE) Alternate Fuel (AF)
Lack of Trust in ecosystem: MSMEs
fail to collaborate with ESCO despite
performance guarantees due to
lack of trust/understanding of such
mechanism.
Awareness and Capacity to
implement latest technology:
MSMEs are unaware of the
technologies and performance
guarantee models run by energy
services companies.
Perceived risk of payment default
by MSMEs: RESCOs require risk of
extending services to MSMEs to be
mitigated due to perceived payment
defaults.
Stakeholder support: State DISCOMs
are required to extend timely support
to the ecosystem to get such renew-
able power plants online.
Awareness on various agro feed:
MSMEs are typically unaware of the
possible agro residues that can be
made into brickettes and pellets for
biomass firing.
Scalability Issues: Many biofuels and
products are perishable and thus
have lower shelf life making it chal-
lenging for logistics. Further, season-
ality factors that impact availability
and many potentially lead to fuel
shortage
Figure 2.29: Key barriers to MSME adoption of s ustainable energy solutions
Source: (Mitra, 2023); (Mori, 2024); (CSTEP, 2024); (TERI, 2020)
2.3 LOW-CARBON TRANSITION LEVERS
Globally and in India, industrial low-carbon transition is advancing through key interventions:
energy and material efficiency, non-fossil electricity, green procurement mandates (including
green public procurement), process electrification, alternative fuels, technological innovation,
and carbon capture, utilisation, and storage (CCUS). These levers are gaining traction across
sectors and have been supported by a range of policy instruments that focus on balancing
energy security, industrial competitiveness, and environmental sustainability. These efforts are
intended to promote technology adoption at both the MSME and large-industry levels.
The sections below highlight select technologies currently central to global and Indian transition
pathways, along with high-impact policies under each low-carbon transition lever.
2.3.1 Energy Efficiency
8
Energy efficiency remains a foundational strategy for industrial low-carbon transition. In India,
the Bureau of Energy Efficiency (BEE), under the Ministry of Power, launched the Perform,
Achieve and Trade (PAT) scheme to accelerate the adoption of energy-efficient technologies
in energy-intensive sectors.
Initial PAT phases established sectoral baselines and benchmarked performance against global
standards. Energy audits and technical studies at Designated Consumer (DC) levels identified
targeted interventions, leading to widespread adoption of efficient technologies, many of which
were developed indigenously. Having implemented early, multi-sectoral interventions, India has
closed a significant portion of the low-hanging energy performance gap. By the end of PAT
8 BEE Reports Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 45
Landscape of the Industry Sector in India
Cycle VI, cumulative CO₂ savings exceeded 110 million tonnes. The focus now shifts to wider
adoption of efficiency and to driving deeper, harder-to-abate efficiency improvements that
require sustained investments, technical support, and policy incentives (BEE, 2023).
Table 2.2: Summary of energy savings (BEE, 2023-24)
Program/ Scheme Sector
Electricity
Savings
(BU)
Total Energy
Savings
(Mtoe)
GHG
Reduction
(MtCO₂)
Monetary
Savings
(INR Crore)
PART - VI
Large Industry
- 1.3 4.5-
PAT - V0.008 0.68 3 1256
PAT - IV0.009 0.75 3 1385
PAT - III0.62 2 5.59 3223
PAT - II36 14 69 43078
PAT - I3 8.67 31 9500
BEE - GIZ MSME0.0 0.0 0.0 0.74
ECBC
Commercial
Building
0.64 0.36 0.53 102
BEE Star Rating
GRIHA
ENS
Residential
Buildings
S&LAppliances 89 8 63 56535
UJALALED Lamps 182 15 130 72800
SLNPMunicipal 9 0.76 6 5535
CAFE-ITransport2 6 6795
Total321.39 53.60 321.06 200212.84
Table 2.3: Policy instruments supporting energy efficiency in industry
Policy / Scheme Applicability Administering BodyDetails
Perform, Achieve and
Trade (PAT) (BEE
2020)
Energy-intensive
sectors like steel,
cement, aluminium,
textiles, paper
BEE, MoP
Cap-and-trade scheme
to reduce specific energy
consumption; enables trading
of Energy Saving Certificates.
Energy Efficiency
Financing Platform
(EEFP) (BEE 2023)
MSMEs and large
industries across
sectors
BEE, SIDBI, IREDA
Platform to ease financing
for EE projects via
standardisation and risk-
sharing mechanisms. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 46
Landscape of the Industry Sector in India
Policy / Scheme Applicability Administering BodyDetails
Promoting energy
efficiency and
renewable energy in
selected MSME clusters
in India (BEE 2023)
MSME clusters
in engineering,
food processing,
ceramics, etc.
UNIDO, BEE, GEF
Capacity building and
implementation support to
MSMEs for energy-efficient
technologies.
Credit Linked
Capital Subsidy
and Technology
Upgradation Scheme
(CLCS-TUS) (MoMSME
2023)
Small and medium
industries in high
energy-use sectors
MoMSME, BEE
Supports modernisation
of technologies in SMEs
for improved energy
performance.
Custom Industrial
Pilots (e.g., UNIDO-
BEE MSME demo
projects)
Sector-specific
(foundries,
ceramics)
MoMSME, BEE,
UNIDO
Demonstrated the feasibility
of electric heating and
drying systems, but not
scaled via policy yet.
2.3.2 Electrification
Industrial heat generation accounts for 20% of global energy demand and is a major source
of emissions. Fossil fuels dominate the process heat mix, with electricity comprising just 11%.
However, about 45% of industrial heat demand is in the low-temperature range (<200°C),
presenting a significant electrification opportunity (Figure 2.30) (IEA, 2018).
Industrial heat
demand by
temperature range (%)
0%40%80%20%60%100%
Low (Upto 200 °C) Medium (Upto 500 °C) High (Above 500 °C)
Figure 2.30: Global industrial heat demand across low, medium, and high temperature
ranges
Source: (IEA, 2018)
Emerging electric heating technologies cater to varied temperature needs. For low- to mid-
range applications (200°–500°C), MSMEs in food processing, textiles, and pulp and paper are
adopting heat pumps, Mechanical Vapour Recompression (MVR), and electric boilers. High-
temperature technologies like turbo and induction heaters can exceed 1,000°C. The economic
attractiveness of these technologies is rising in regions with high gas prices and carbon pricing
(BEE). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 47
Landscape of the Industry Sector in India
Table 2.4: Temperature range of potential electric heating technologies
Temperature Range (°C)Potential Electric Heating Technologies
Up to 200 Heat Pump, Electric Boilers
Up to 500Electric boilers, Combined Thermal storage systems,
Resistance heating, Process Air Heaters
Beyond 500Induction heating, Plasma torches, Electric arc furnaces,
Shockwave heating, RotoDynamic Heaters (RDH)
India is promoting such technologies under BEE initiatives, listing electric boilers and process
upgrades as recognised efficiency measures. While arc furnaces are exceptions, electricity
remains underutilised for process heat due to higher levelised costs relative to fossil fuels (MoP
2024).
Box-7: Case Study: Heat Pump Replacing Gas Boiler in a Dairy facility
9
Heat pumps are increasingly being recognised as a viable solution for electrifying low-
to medium-temperature industrial heat applications. Their ability to utilise ambient
or waste heat sources and convert them efficiently into process steam makes them
particularly attractive for sectors such as food processing and dairy. A notable example
comes from Norway, where Olvondo Technology collaborated with a dairy factory to
replace gas-fired steam boilers that previously consumed 21.1 GWh of electricity annually.
The company installed four high-temperature HighLift heat pumps that used a 25°C
waste heat source to generate steam in the range of 175°C to 184°C. This intervention
resulted in annual electricity savings of 5 GWh, a 30% reduction in energy costs, and
additional secondary savings of USD 33,000 per annum. Most importantly, the shift led
to a 66% reduction in CO₂ emissions and was able to meet 95% of the facility’s steam
demand, demonstrating the significant potential of heat pump technologies in industrial
low-carbon transition.
Table 2.5: Schemes facilitating electrification of industrial processes
Policy / Scheme Applicability Administering Body Details
Credit Linked
Capital Subsidy
and Technology
Upgradation
Scheme (CLCS-
TUS) (MoMSME,
2023)
Small and medium
industries in high
energy-use sectors
MoMSME, BEE
Supports modernisation of
technologies in SMEs for
improved energy performance.
Custom Industrial
Pilots (e.g., UNIDO-
BEE MSME demo
projects)
Sector-specific
(foundries,
ceramics)
MoMSME, BEE,
UNIDO
Demonstrated the feasibility
of electric heating and drying
systems, but not scaled via
policy yet.
9 Industrial Heat Pumps: It’s time to go electric Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 48
Landscape of the Industry Sector in India
2.3.3 Low-Carbon Electricity Production
Indian industries remain heavily reliant on grid electricity, which is primarily coal-powered.
MSMEs in textiles, plastics, rubber, and food processing source 70–85% of their electricity from
the grid, while larger sectors like cement, aluminium, and steel rely more on captive power
(see Figure 2.31). In 2022, India’s grid emission intensity stood at approximately 715 gCO₂/kWh,
significantly higher than countries like France (~27 gCO₂/kWh) (CEA, 2023; Nowtricity, 2024).
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Aluminium
Cement
Chemicals
Fertiliser
Food Prodcuts
Iron & Steel
Non Ferrous
Paper
Plastic
Rubber
Textile
% Grid Dependency
9%
38%
39%
23%
71%
34%
25%
21%
57%
85%
75%
Figure 2.31: Grid dependence across key industrial sectors (2022–23)
Source: (CEA, 2024)
India is expanding its clean electricity capacity, reaching around 267 GW of non-fossil based
(utility) as of Dec. 2025 (CEA, 2025). Industrial (non-utility) renewable installations reached
8,974 MW, dominated by solar (3,610 MW, 40%) and wind (4824 MW, 53.75%) by 2023-24 (CEA,
2025). Biomass contributes just 265.9 MW, though it is more widely used indirectly via steam
and waste heat recovery in sectors like sugar and paper (Table 2.5).
While solar and wind remain the most scalable solutions, their expanded adoption, especially
through captive generation, is gradually reshaping industrial electricity use.
India is also beginning to position nuclear power, particularly Small Modular Reactors (SMRs),
as a future option for low-carbon captive supply to energy-intensive industries. Recent
announcements under the Nuclear Energy Mission for Viksit Bharat envisage indigenously
designed SMRs such as the 200 MWe Bharat Small Modular Reactor and a 55 MWe SMR that
can be deployed close to industrial loads or at repurposed coal plant sites, with NPCIL inviting
private industry participation for captive Bharat Small Reactors to serve sectors like steel,
aluminium and chemicals (PIB, 2025). The SHANTI Act, 2025, which opens nuclear generation
to greater private and joint-venture participation and explicitly promotes SMRs for industrial Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 49
Landscape of the Industry Sector in India
and captive use, can enable commercial nuclear solutions to complement renewable energy in
decarbonising industrial electricity demand over the medium to long-term (PIB, 2025).
Table 2.6: Renewable electricity usage by industry (2022–23) (BEE, 2022-23)
Industry RE Generation (GWh) Energy Consumption (GWh) % RE of Total Consumption
Rubber422140.18
Textile66166810.4
Food Products 1638230.42
Plastic711990.58
Aluminium584529671.1
Non Ferrous6152841.15
Chemicals211183641.15
Paper17583202.1
Cement785301032.61
Iron & Steel 2195779402.82
Table 2.7: Policies enabling procurement and use of low-carbon electricity
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
Renewable
Purchase
Obligation (RPO)
(MoP, 2022)
Obligated entities,
including large industries
with open access
consumption
MNRE, MoP,
CERC, SERCs
Mandates minimum RE
procurement targets; updated
to include green hydrogen and
green ammonia obligations.
Green Energy Open
Access Rules
(MoP, 2022)
Industries with contracted
demand >=100 kW to
procure RE directly
MNRE, MoP,
CERC, NLDC
Simplifies RE procurement and
banking; ensures faster approval
and concessional charges for
industrial users.
Green Term Ahead
Market (GTAM)
(MNRE, 2020)
Industries participating
in power exchange
for short-term RE
procurement
CERC, IEX
Enables industries to buy RE
(solar, wind) on a short-term
basis through IEX without a long-
term PPA.
ISTS Waiver for
RE Projects (MoP
2023)
RE generators supplying
to industrial users via
open access
MNRE, CEA
Waives interstate transmission
charges for solar and wind power
until June 2025 for open access
projects.
2.3.4 Alternative Fuels
India’s energy landscape is dominated by fossil fuels and significant imports. In 2023–24, 89%
of crude oil and 47% of natural gas were imported. Coal consumption reached 1,277 million
tonnes, of which 20% was imported, with steel alone consuming 58 million tonnes. (BEE 2024)
India is now prioritising alternative, low-emission fuels such as biofuels, cleaner fossil fuels Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 50
Landscape of the Industry Sector in India
(CFFs), and electrofuels (E-fuels). Globally, low-emission fuels accounted for just 1% of final
energy use in 2022.
Table 2.8: Types of low-carbon fuels
Category DefinitionExamples
Biofuels
Fuels produced from biological/organic
materials
Ethanol, biodiesel, bio-oils, bio-
alcohols (methanol, butanol)
Cleaner Fossil
Fuels (CFFs)
Fossil-based fuels with relatively lower
lifecycle emissions
LPG, LNG, RDF-based fuels, crude
oil-based fuels with carbon capture
E-fuels
A broad set of technologies that
convert non-fossil electricity into fuels,
chemicals, or power
(Power to X)
Green hydrogen, green ammonia,
e-methanol, synthetic methane,
e-diesel
Source: India Energy Scenario 2023-24, MoP; Fuels Industry UK (BEE, 2024)
Biofuels
Adoption is strong among MSMEs with access to in-house feedstock. For example, paper and
pulp units use black liquor and wood residue, and sugar mills leverage bagasse cogeneration,
supporting both in-house energy and national ethanol blending targets (20% blending by
2025–26). Agricultural residue use is rising in food processing and textiles, though biofuel
adoption remains limited in hard-to-abate sectors (MNRE 2013; Gosavi & Katti, 2016; Nagar &
Kumar, 2024).
Box-8: Biofuels in India
According to Energy Statistics of India 2025, as of March 31, 2024, Biomass, which
includes agricultural waste, forest residues, and other organic matter, has a potential
of 28,447 MW of energy generation, accounting for 1% of the total renewable power
potential.
Cogeneration from Bagasse: India has a specific potential of 13,818 MW (1%) from
bagasse-based cogeneration in sugar mills. This is a highly efficient form of energy
generation, especially in regions with a robust sugar industry.
Cleaner Fossil Fuels (CFFs)
India’s gas pipeline network spans 24,720 km, and another 8,600 km is under construction.
Industrial natural gas use more than doubled from 701 Million Metric Standard Cubic Meters
(MMSCM) in FY 2019–20 to 1,457 MMSCM in FY 2023–24. Refuse-Derived Fuel (RDF) from
municipal solid waste, currently underutilised, is primarily consumed by the cement sector,
replacing 10–15% of conventional fuels. Only 2,000–3,000 tonnes of RDF are produced daily Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 51
Landscape of the Industry Sector in India
across 30+ plants. Scaling RDF infrastructure is critical to reducing landfill waste and increasing
industrial substitution (Swamy & Arora, 2024).
E-fuels:
Green hydrogen is the leading E-fuel, with growing use in the steel and fertiliser sectors. While
cost remains a barrier, projects and pilots across India are gaining momentum. Hydrogen
blending in natural gas and its use in industrial boilers are also being explored. A supporting
ecosystem is emerging through policy signals and pilot projects to scale up production and
reduce costs (NITI Aayog & RMI 2022).
Table 2.9: Green hydrogen projects, (MNRE, 2023)
Project Name Status Location End Use
Electrolyser
Capacity
(MW)
Project
Capacity
(Tonnes
H
2
P.A.)
OIL India - Jorhat
Pump Station AEM
Electrolyser
Commissioned Assam
Blending with
Natural Gas
0.1 3
NTPC - City Gas at
NTPC Kawas
Commissioned
Gujarat –
Surat
Blending with
Natural Gas
0.05 0.7
ACME - Green
Hydrogen and Green
Ammonia Plant,
Rajasthan
Commissioned
Rajasthan -
Bikaner
Fertilisers 2.1 314
NTPC - Green
Hydrogen for Ladakh
Fuelling Station
Commissioned
Ladakh -
Jammu and
Kashmir
Mobility 0.206 29
Hygenco Heartland
Ujjain Hydrogen Plan
Commissioned
Madhya
Pradesh
- Ujjain -
Makone
Research 0 0
Shell - Bengaluru
Green Hydrogen
Project
Commissioned
Karnataka -
Bangalore
Green
Hydrogen
1 142
L&T - Green Hydrogen
Plant
Commissioned
Gujarat –
Hazira
Heavy
Industry
1 157
GAIL- GH
2
Project Commissioned
Vijaipur
Complex,
Madhya
Pradesh
PEM
electrolyser
for the GH
2
producing
unit
10 1570 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 52
Landscape of the Industry Sector in India
Project Name Status Location End Use
Electrolyser
Capacity
(MW)
Project
Capacity
(Tonnes
H
2
P.A.)
SJVN Limited -NJHPS
Multi-purpose GH
2
Pilot
Project
Commissioned
Jhakri,
Himachal
Pradesh
Green
Hydrogen
generation
0.1 4
Table 2.10: Government initiatives promoting low-carbon and alternative fuels
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
National Green
Hydrogen Mission
(MNRE 2023a)
Steel, fertilisers, refining,
and chemical industries
with high hydrogen use
MNRE,
MoPNG, MoF
Incentivises green hydrogen
production and use in industrial
processes; targets 5 Mt by 2030.
MSW to Refuse
Derived Fuel
(RDF) Policy
(Solid Waste
Management
Rules, 2016)(MNRE
2023b)
Cement, pulp & paper,
and other industries using
RDF for co-processing
MoHUA,
MoEFCC
Mandates urban local bodies
to channel RDF from municipal
waste to eligible industries for
co-processing.
National Policy
on Biofuels (2018,
amended, 2022)
(MoPNG, 2022)
Distilleries, sugar, paper,
textile industries using
bio-oil, biochar, or 2G
ethanol
MoPNG, MNRE
Supports industrial biofuel
applications, including 2G
ethanol, biodiesel, biochar, and
other renewable fuels.
Bio-Energy
Programme
(Waste to Energy
Sub-scheme)
(MNRE 2022)
Industries using RDF,
biomass pellets, or
bio-CNG for thermal
substitution
MNRE
Provides financial support for
industrial adoption of waste-
derived fuels and related
infrastructure.
Gujarat Green
Hydrogen Policy
2024
(GEDA, 2024)
Industries in Gujarat are
piloting green hydrogen-
based process fuel
switching.
Govt. of
Gujarat
Offers capital subsidies and
demand aggregation incentives
for hydrogen fuel switching in
industries.
PM-JI-VAN
Scheme (PIB,
2023)
Provides financial support
to 2nd-generation biofuel
production plants –
both commercial and
demonstration.
Centre
for High
Technology
(CHT), MoPNG
Financial assistance in the
form of viability gap funding
is provided – INR 150 crore for
commercial projects and INR 15
crore for demonstration projects.
2.3.5 Circular Economy
The circular economy offers potential for emission reductions by lowering demand for virgin
materials. Globally, only 7.2% of materials in 2023 were from circular sources (down from
9.1% in 2018). Yet, recycling rates are growing: 90% of steel, 73% of aluminium, 60% of paper,
40% of copper, and 27% of concrete waste is recycled worldwide (Deloitte & Circle Economy
Foundation, 2023).
Steel: India’s Steel Scrap Recycling and Vehicle Scrapping policies promote circularity, Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 53
Landscape of the Industry Sector in India
though scrap availability remains a challenge. India imported 9.8 million tonnes of
ferrous scrap in 2022–23, 30% of total demand (Kumar & Agarwal, 2024). Scrap-
based steelmaking is vital for low-carbon transition and aligns with regulations like
the EU’s CBAM.
Cement: The sector uses industrial and other waste (e.g., fly ash, slag, gypsum, RDF,
biomass). Further progress is needed to reduce clinker use and improve concrete
efficiency through strategies like longer building lifespans and construction waste
recycling (GCCA & TERI, 2025; Deloitte & Circle Economy Foundation, 2023).
Aluminium: Against a global recycling at 98%, the 30% rate in India is low. The Non-
Ferrous Metal Scrap Recycling Framework seeks to formalise scrap processing and
expand secondary aluminium production, which requires only 5% of the energy used
in primary production, delivering substantial emissions savings (Deloitte & Circle
Economy Foundation, 2023).
Box-9: Case Study: Nucor Steel
HNucor Corporation (USA) is a global leader in circular steel production. Nearly 70%
of Nucor’s steel is produced using Electric Arc Furnace (EAF) technology, which
relies mainly on scrap metal and results in 75% lower emissions intensity compared to
traditional blast furnace routes.
Key Achievements:
Over 20 million tonnes of scrap recycled annually.
GHG intensity of 0.45 tCO
2
/tonne of steel, compared to the global average of
~1.85 tCO
2
/tonne.
Achieved Scope 1 & 2 emissions that were 67% below the global steelmaking
average.
Committed to Net Zero by 2050, with interim targets set for 2030.
Table 2.11: Circular economy policies for resource recovery and industrial recycling
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
Steel Scrap
Recycling Policy
(MoS, 2019)
Steel sector using
scrap-based production
(EAF/IF route)
Ministry of
Steel
Promotes the use of steel scrap
for greener production routes,
reducing demand for virgin ore
and energy use.
CPCB Co-processing
Guidelines for Waste
in Cement Kilns
(CPCB, 2017)
Cement and thermal
process industries co-
processing RDF, plastic,
and industrial waste
CPCB, MoEFCC
Allows safe and regulated
industrial waste co-processing
in cement kilns; reduces reliance
on virgin fuels.
Vehicle Scrappage
Policy, (2021)
(MoRTH 2021)
Steel, aluminium, and
auto sectors through
formal scrap recovery
MoRTH, MoHI
Facilitates recovery of end-of-
life vehicles and materials like
steel, aluminium, and plastics for
secondary use. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 54
Landscape of the Industry Sector in India
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
Draft National
Resource Efficiency
Policy (NREP)
(MoEFCC, 2019)
Cross-sectoral push
for secondary resource
use in industrial supply
chains
MoEFCC
Outlines targets for material
efficiency, reuse, and recycling
in industrial value chains; yet to
be finalised.
Extended Producer
Responsibility (EPR)
(ORF, 2025)
Holds producers
responsible for the
disposal and handling
of products post-
consumption.
MoEFCC, CPCB
Mainly responsible for reducing
packaging waste, this policy
has been aimed at single-use
plastics. However, the same has
been extended to e-waste as
well.
2.3.6 Carbon Capture, Utilisation, and Storage
Carbon Capture, Utilisation, and Storage (CCUS) is emerging as a key pillar of India’s industrial
sector low-carbon transition strategy, particularly for hard-to-abate sectors such as steel, cement,
refinery and chemicals. A dedicated “Carbon Capture, Utilisation, and Storage (CCUS) Policy
Framework and its Deployment Mechanism in India” released by NITI Aayog positions CCUS
as critical for enabling low-carbon industrial growth, while recognising the cost and regulatory
challenges associated with early deployment (NITI Aayog, 2022).
India is beginning to build a CCUS ecosystem through pilot and demonstration projects,
academia-industry testbeds, and new policy instruments. Initial efforts include cluster-based CCU
testbeds in the cement sector, emerging proposals for CO
2
transport and storage infrastructure,
and exploratory work on linking CCUS projects with evolving domestic carbon markets and
potential international carbon finance. Though nature-based solutions continue to complement
these efforts, industrial low-carbon transition is increasingly anchored in technological measures
such as CCUS to deal with process emission.
Global momentum further reinforces this direction. By 2022, there were 30 commercial CCS
facilities worldwide, 11 under construction, and 153 in development, with 61 new facilities added
to the pipeline in a single year, reflecting the rapid expansion of the project pipeline. The US,
supported by strong tax incentives, has emerged as the largest CCUS market, while countries
such as Netherlands, Norway and the UK are advancing shared industrial clusters for storage
and transport. This offers relevant lessons for India’s emerging plans for CCUS hubs linked to
major industrial and coastal corridors.
Table 2.12: CCUS projects and initiatives in India
Industry CompanyDetails of the project
Steel Tata Steel
Tata Steel commissioned a 5 tpd CO
2
capture plant
from the blast furnace at the TSL Jamshedpur site, with
upcoming plans to re-use the captured CO
2
within the
process value chain.
JSPL
JSPL commissioned a 2000 tpd CO
2
capture plant from
the coal gasification operations at Angul, with plans for CO
2
utilisation into bio-ethanol, methanol, and soda ash, etc. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 55
Landscape of the Industry Sector in India
Industry CompanyDetails of the project
Cement Dalmia Cement
Dalmia Cement signed an MOU with a carbon capture
technology provider at their Tamil Nadu plant to capture
500,000 TPA CO
2
.
Chemical
BHEL and CSIR-
CIMFR
Coal-to-methanol pilot plants commissioned for carbon
capture and their utilisation in methanol production
Tuticorin Alkali and
Chemicals (TFL)
TFL commissioned a 200 tpd CO
2
capture plant, and
captured CO
2
is utilised in baking soda production
Petrochem BPCL
BPCL conducted a feasibility study for the gasification of
1.2 Mtpa petcoke and utilised it in carbon-abated materials,
the power sector, etc.
Oil and Gas
ONGC
ONGC signed an MoU with Shell for a study exploring a
storage site for capturing carbon and EOR in key basins in
India, and another MoU with Equinor for evolving hubs and
projects related to CCUS.
ONGC and IOCL
Conducted a feasibility study for 0.7 Mtpa of captured CO
2
from IOCL’s Koyali refinery and utilising the captured CO
2
for Enhanced Oil Recovery at Gandhar oilfields of ONGC,
and usage in the F&B sector
Power NTPC
Pilot project at Vindhyachal thermal power plant and a plan
to convert captured carbon into methanol.
Development of amine-based technology for CO
2
emissions
capture.
Demonstration of biotechnology-based (microalgae) CO
2
emissions capture.
Pilot plant on CO
2
utilisation (10 TPD CO
2
) for the
generation of an ethanol plant at NTPC power plant
premises.
Pilot project on CO
2
utilisation for the production of
carbonated aggregates by means of fly ash, and to capture
CO
2
from the flue gas of a power plant.
Source: Perspectives on CCUS deployment on a large scale in India: Insights for low carbon pathways Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 56
Landscape of the Industry Sector in India
(NITI Aayog, 2022)
2.3.7 Carbon Management
India’s carbon management framework operates across two complementary levels: domestically
through instruments such as the Carbon Credit Trading Scheme (CCTS) and the MISHTI
initiative, which address industrial compliance and nature-based offsetting, respectively and
internationally through participation in Article 6.4 of the Paris Agreement, which enables cross-
border mitigation and carbon credit trading. Together, these mechanisms establish a layered
approach to industrial low-carbon transition, allowing energy-intensive sectors such as steel and
cement to achieve emission reductions via verified low-carbon options.
Table 2.13: Carbon management and trading mechanisms for industrial emission reduction
Policy/Scheme/
Programme
Applicability Administering
Body
Details
Carbon Credit
Trading Scheme
(CCTS) (BEE
2023)
Industries adopting
low-carbon fuels,
energy efficiency, or
CCS are eligible for
trading credits.
MoEFCC, BEE Operational national compliance carbon
market for verified industrial emission
reductions, governed under the Energy
Conservation Act.
Mangrove
Initiative for
Shoreline
Habitats &
Tangible Incomes
(MISHTI)
(MoEFCC, 2024)
Industries interested
in carbon offsets
through nature-
based solutions
(e.g., coastal cement
plants)
MoEFCC Promotes afforestation and carbon
sink generation in coastal regions,
applicable for offsetting industrial
residual emissions.
Article 6.4 Paris
Agreement
Participation
Industrial projects
in GHG mitigation,
alternative materials,
and removal activities
MoEFCC
(National
Designated
Authority)
Enables trading of Internationally
Transferred Mitigation Outcomes
(ITMOs); key notified technologies
include renewable energy with storage,
green hydrogen, compressed biogas,
CCUS, green ammonia, sustainable
aviation fuel, and emerging energy
efficiency technologies. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 57
Landscape of the Industry Sector in India
Ministry of Steel’s
Green Steel
Taxonomy
(Dec, 2024)
Adoption of
the Green Steel
Taxonomy is not
mandatory. Steel
producers may
opt in to get their
steel assessed and
certified as “green”.
Ministry of
Steel (MoS)
India is the first country to notify a
Green Steel Taxonomy supporting
global competitiveness. “Green Steel”
shall be defined in terms of percentage
greenness of the steel, which is
produced from the steel plant with
CO
2
equivalent emission intensity less
than 2.2 tonnes of CO
2
e per tonne
of finished steel (tfs). The greenness
of the steel shall be expressed as
a percentage, based on how much
the steel plant’s emission intensity is
lower compared to the 2.2 tCO
2
e/tfs
threshold.
Conclusion
India’s industrial sector stands at the core of its development strategy, contributing substantially
to GDP, employment, and export competitiveness, even as the country moves toward a low-
carbon growth model. Balancing rapid industrial expansion with climate mitigation is therefore
essential, particularly in hard-to-abate sectors.
Over the past decade, India has built a robust policy foundation for industrial low-carbon
transition through schemes such as Perform, Achieve, and Trade (PAT), the recently notified
Carbon Credit and Trading Scheme (CCTS), and sector-specific programmes that promote energy
efficiency, electrification, fuel switching and circularity. These instruments reflect an approach
that is responsive to domestic development needs rather than simply mirroring global templates.
Achieving a competitive low-carbon transition, however, will require scaling these efforts through
stronger coordination, deeper markets and accelerated technology deployment. Priority actions
include: tightening and expanding performance-based schemes, setting clear and credible low-
carbon standards for major industrial value chains and designing targeted financial instruments
and de-risking mechanisms, especially for MSMEs, to unlock investment in efficiency, clean
electricity, CCUS and clean fuels. An integrated approach that links policy, regulations, financial
incentives, and innovations can position India not only to meet its Net Zero goals but also to
emerge as a global leader in competitive low-carbon industrial development. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 59
Landscape of the Industry Sector in India
3
INDUSTRY SECTOR
MODELLING AND
RESULTS Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 60
Industry Sector Modelling and Results
This chapter presents the modelling outcomes that explore how India’s industry sector may
evolve under two scenarios: the Current Policy Scenario (CPS) and a Net Zero Scenario (NZS)
aligned with India’s 2070 climate commitment. The results trace changes in commodity demand,
efficiency improvements, technology and fuel mix to 2070, while also examining the investment
requirements needed to enable this transition.
For estimation of industrial energy-use, emissions and investment, the model disaggregates
industry into nine sectors: i) Steel, ii) Cement, iii) Aluminium, iv) Textiles, v) Paper and Pulp, vi)
Ethylene, vii) Chlor-Alkali, viii) Fertiliser and ix) Refineries. Together, these sectors account for
51% of industrial energy demand and ~60% of industrial emissions in 2025. Other sectors, such
as Glass, Bricks, Ceramics, Rubber, Food processing, etc., are not modelled separately due to
limitations in baseline data availability; instead, they are represented as a single aggregated
“other industry” category. Future iterations of this modelling exercise will seek to further
disaggregate this category as data quality and coverage improve.
The next section discusses the sector-wise approach and methodology adopted, including the
results, followed by overall total industrial sector emissions, mitigation strategies and investment
requirements.
3.1 MODELLING FRAMEWORK
For the industry sector, transition pathways are developed utilising an integrated energy system
modelling framework that comprises all major energy-economy sectors and represents their
interlinkage. One of the key inputs to this framework is activity demand for each end-use sector;
in the case of industry, this is the projected production of individual subsectors. Production
trajectories are generated exogenously using a combination of methods, including historical
trend analysis, econometric regression, elasticity analysis and per capita saturation trends in
major economies. Detailed production projections for each industry subsector are presented in
the respective subsector sections. Given these activity projections, the model uses the defined
technology options with their techno-economic parameters and the assumed fuel mix, including
domestic availability, import and price trajectories. The model then determines the evolution of
capacity and fuel use required to meet sub-sectoral production under two scenarios: Current
Policy Scenario (CPS) and Net Zero Scenario (NZS) discussed in the next sections. These
scenario-specific assumptions on technology choice and fuel mix finally determine the estimates
of industrial energy demand, emissions, and investment requirements (see Figure 3.1).
3
Industry Sector
Modelling and Results Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 61
Industry Sector Modelling and Results
Estimated
Production (Mt):
• Iron & Steel
• Aluminum
• Cement
• Fertiliser
• Chemicals
• Soda Ash
• Caustic Soda
• Paper & Pulp
• Textile
• Other Industry
Technology-wise
Production for
Each Sub-sector
Energy
Consumption,
and Emissions
Technology
Penetration
Specific Energy
Consumption, Fuel
Mix, Cost, and
Emission Factors
Figure 3.1: Modelling framework
Demand Estimation
Annual production is projected using two complementary approaches selected to reflect
underlying production dynamics in each industry based on changes in per-capita GDP (See
Annexure-I for Real GDP growth rates and population projections).
A saturation-growth (logistic S-curve) is used for stock-building materials — steel,
cement, aluminium, and textiles – in which per-capita use rises with development
and then plateaus. Per-capita demand is modelled as:
????????????????????????
????????????
(????????????????????????−????????????)
=????????????∗????????????????????????(
????????????????????????????????????
????????????????????????????????????????????????????????????????????????
)+????????????
Where:
S = per capita industrial demand
So = saturation limit
a,b = coefficients estimated from historical data
Saturation limits are calibrated to global benchmarks and India’s long-run stock needs for
housing, infrastructure, and capital goods.
A regression-based model is applied where demand follows measurable drivers rather than
stock saturation, as in the case of fertilisers, chemicals (ethylene), chlor-alkali (soda ash,
caustic soda), paper and pulp, and “other industry.” A simple per-capita specification used
in this report is:
????????????=????????????∗(
????????????????????????????????????
????????????????????????????????????????????????????????????????????????
)+????????????
Where:
S = per capita industrial demand
m, c = coefficients estimated on historical data Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 62
Industry Sector Modelling and Results
Energy and Emission Estimation
Each sub-sector is then mapped to its prevailing technology pathways, associated specific
energy consumption, and fuel consumption patterns. This includes categorisation into thermal
and electrical energy demands (further divided into grid and captive), and identification of
primary fuels such as coal, natural gas, electricity, and renewable sources. Energy demand is
calculated by multiplying the estimated production volumes by technology-specific Specific
Energy Consumption (SEC) in Gigajoules (GJ) or Tonnes of Oil Equivalent (toe) per tonne.
Further, industry sector emissions are estimated using IPCC Tier 2 or Tier 3 methodologies and
are attributed to a combination of sources, including:
1. Energy Emissions
a. Fuel-Related Emissions: Emissions resulting from the combustion and utilisation of
fuels (both fossil and non-fossil sources) at industrial facilities for applications other
than electricity generation, such as for producing process heat or steam.
b. Electricity Generation Emissions: Emissions associated with the production of
electricity consumed by industrial facilities, whether the electricity is generated onsite
or procured from the grid.
2. Industrial Processes and Product Use (IPPU) Emissions
Emissions arising directly from chemical or physical transformations of material in industrial
activities and product use, rather than from fuel consumption for energy. Typical examples
include the process CO
2
released during clinker production in the cement industry, the reduction
reaction in iron and feedstock or process emissions in chemical and fertiliser manufacturing.
The modelling outputs include emissions of CO₂, CH₄, and N₂O, CF4, C2F6, etc., expressed in
CO₂e terms using the AR5 method for consistency with national inventory reporting.
Scenarios
The pace and shape of India’s industrial sector energy transition will be driven by policy choices,
technology deployment rates, and structural shifts in the economy over the coming decades.
To reflect this complexity and explore a range of plausible pathways, this study develops two
distinct scenarios for the industry sector: the Current Policy Scenario (CPS) and the Net Zero
Scenario (NZS).
Current Policy Scenario (CPS): The CPS represents a continuation of existing policies and
initiatives, reflecting the current pace of technology deployment, regulatory enforcement, and
voluntary industry efforts. It assumes gradual improvements in energy efficiency, moderate
fuel diversification, and incremental uptake of cleaner technologies within the prevailing policy
landscape.
Net Zero Scenario (NZS): The NZS outlines a transformative and more ambitious pathway
aligned with India’s commitment to reach Net Zero GHG emissions by 2070. It assumes proactive
policy interventions, accelerated innovation, and a system-wide shift toward electrification, low-
carbon fuels, circular economy principles, and carbon capture technologies. This scenario is
shaped by the long-term NZ goal and supported by global best practices. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 63
Industry Sector Modelling and Results
While carbon capture, utilisation and storage (CCUS) is recognised as a critical enabler for
achieving Net Zero in hard-to-abate industrial sectors, CCUS is not embedded as a baseline
technology within the sectoral technology mix. Instead, the model estimates the magnitude of
carbon capture required to close the residual emissions gap in the Net Zero Scenario, and these
requirements are analysed separately and discussed under overall industry results.
The next sections present sub-sectoral modelling results under the Current Policy Scenario (CPS)
and Net Zero Scenario (NZS), covering demand projections, technology pathways, energy use,
emission intensity, and investment needs, while sectoral landscapes and energy consumption
profiles can be referred from Chapter 2.
3.2 RESULTS FOR INDUSTRY SUB-SECTORS
3.2.1 Steel
Projections for Crude Steel Production
Crude steel production is projected using a saturation-growth model as described in Section 3.1,
wherein per capita steel consumption rises with income until saturating at a high level. India’s
low current per-capita steel use underscores the scope for growth in comparison to other
economies. For example, at around 97.7 kg/capita in 2023-24, India’s steel consumption is one-
third of the global average and only ~20% of the level seen in advanced economies (Ministry
of Steel, 2025; Climate Policy Initiative, 2023).
As India industrialises, steel demand is expected to increase rapidly by mid-century, after which
the growth is expected to slow down. This mirrors the pattern seen in other industrialised
nations (See Figure 3.2). Using a logistic S-curve with an assumed saturation around 450 kg/
capita (peak levels observed in developed economies), India’s total crude steel production
is projected to rise from 144.29 Mt in 2024 to 624 Mt by 2050 and 821 Mt by 2070 (see
Figure 3.3). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 64
Industry Sector Modelling and Results
700
600
500
400
300
200
100
0
10000
India
Brazil
World Average
Russia
China
EU
Germany
USA
020000 30000 40000 50000 60000 70000 80000
GDP per capita, PPP (constant 2021 international USD)
Steel use per capita (kg)
Figure 3.2: Global comparison of GDP/capita vs steel use/capita
900
800
700
600
500
400
300
200
100
0
2020202420502070
Million Tonne
Figure 3.3: Crude steel production (million tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 65
Industry Sector Modelling and Results
Scenarios
Two scenarios are developed to assess low-carbon transition pathways for the steel sector:
Current Policy Scenario (CPS) and Net Zero Scenario (NZS) (as described in Table 3.1). Both
scenarios assume similar growth in steel production but differ fundamentally in their assumptions
on technology mix, energy efficiency, fuel use, source of electricity, and scrap utilisation, which
are tabulated below:
Table 3.1: Scenario assumptions for steel sector
Current Policy ScenarioNet Zero Scenario
Technology
Mix
Dominance of Blast Furnace &
Basic Oxygen Furnace (BF-BOF)
till 2050, beyond which annual
capacity addition reduces
DRI (Gas)-EAF to be transition
technology
DRI (Hydrogen)-EAF
Commercialisation starts from
2035, and scale comes only after
2045
DRI(Coal-IF): No addition after
2030
Dominance of Blast Furnace
& Basic Oxygen Furnace (BF-
BOF) till 2040 and no new
addition after 2060; BF-BOF
capacity that remains in 2070 is
coupled with CCS/CCUS
DRI (Gas)-EAF to be transition
technology; No capacity
addition after 2040
DRI (Hydrogen)-EAF
commercialisation starts from
2030 with significant scale
emerging from the 2040s.
DRI(Coal-IF): No addition after
2030
Specific
Energy
Consumption
(SEC)
Overall, SEC declines by roughly 12% by
2050 and about 23% by 2070 versus
2025, driven by changes wherein average
SEC catches up with India’s best plants
as of today.
Overall, SEC falls by around 24%
by 2050 and approximately 35-38%
by 2070 relative to 2025, driven by
changes wherein average SEC catches
up with global best plants as of today.
Share of
Grid/Captive
Share of captive: 64% (2025) to 56%
(2050) and 50% (2070), reflecting
conservative views wherein the industry
adds significant fossil capacity to meet
the electric needs reliably.
Share of captive: 64% (2025) to 48%
(2050) and 35% (2070), reflecting a
gradual increase towards the use of
Grid, which is assumed to be low-
carbon and reliable.
Fuel Mix
for Captive
Power
Coal-based generation: 93% (2025) to
53% (2050) and 40% (2070), wherein
coal continues to be the dominant source
owing to reliability concerns.
Coal-based generation: 20% (2050) and
phased out by (2070) due to priority
shift towards renewables and captive
nuclear driven by ambitious targets
through CCTS, tightening of taxonomy
thresholds and decline in storage costs
for deploying RTC renewables.
Scrap Share Remains the same at the current level
of 20% in 2025 as the ecosystem for
Circularity improves gradually
Improves from 20% in 2025 to 30%
by 2050 and 40% by 2070 with an
enabling ecosystem for circularity
through strong EPR policies, minimum
recycled content norms and a
formalised value chain. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 66
Industry Sector Modelling and Results
Results
Energy Demand: To meet a nearly sixfold increase in steel production, from 144 Mt in 2024
to 820 Mt in 2070, final energy consumption is projected to rise from 69 Mtoe in 2025 to
251 Mtoe in 2070 (3.6x) under Current Policy Scenario (CPS) and to 155 Mtoe under Net
Zero Scenario (NZS) (2.2x) (see Figure 3.4). Despite the significant scale-up in production,
energy intensity improves even under CPS due to energy efficiency gains, gradual penetration
of newer technologies such as Green H
2
, and increased use of renewable energy. In the NZS,
wider adoption of efficiency measures, higher scrap utilisation, phase-out of energy-intensive
processes such as coal-based DRI, and greater use of low-carbon fuels result in final energy
demand being about 38% lower than under CPS. Notably, after 2050, NZS shows a flattening
of energy demand even as production continues to grow. These trends align with global Net
Zero roadmaps (IEA, Mission Possible Partnership), which indicate that steel sector energy use
plateaus or declines after mid-century as a result of transformative technological changes.
Technology and Fuel Mix: By 2070, the nature of steel production under the Net Zero Scenario
fundamentally differs from the present. The NZ pathway is dominated by low-carbon routes,
with approximately 40% of output from scrap-based EAF and around 50% from GH
2
DRI–
EAF, leaving only about 10% from coal-based BF–BOF equipped with CCS. In contrast, under
Current Policy Scenario (CPS), BF–BOF remains the single largest route, supplying around 50%
of production in 2070, with hydrogen DRI–EAF (25%), NG DRI–EAF (7%), and scrap-based
EAF (18%) comprising the balance. The divergence in technology pathways is already evident
in 2050, when Net Zero Scenario shows a pronounced shift towards hydrogen DRI–EAF and
higher scrap shares, while Current Policy Scenario (CPS) continues to be reliant on BF-BOF
capacity.
300
250
200
150
100
50
0
Grid electricityCaptive ElectricityGasCoalGH
2
202020252050
CPSCPSNZSNZS
2070
Mtoe
Figure 3.4: Final energy consumption in steel sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 67
Industry Sector Modelling and Results
Million Tonne
NG DRI-EAF Coal DRI-IF Hydrogen DRI-EAFCoal DRI-EAFBF-BOFScrap
900
800
700
600
500
400
300
200
100
0
2020 20252050
CPSCPSNZSNZS
2070
Figure 3.5: Technology-wise steel production (million tonnes) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
This shift in technology mix directly drives the transformation of the fuel profile (see Figure
3.5). The evolution of fuel mix under the Current Policy Scenario reflects a continuation of the
coal-centric production pathway. The combined use of coking and non-coking coal (excluding
non-coking coal used for electricity generation) under this scenario rises from 55 Mtoe in 2025
to ~160 Mtoe by 2070, supplying most of the sector’s energy. Electricity also sees growth from 9
Mtoe in 2025 to ~41 Mtoe by 2070, with a high EAF share; however, captive electricity is largely
from the coal route. Under Net Zero Scenario, total coal use falls sharply to 26 Mtoe by 2070,
confined mainly to residual BF-BOF capacity equipped with CCS. Green hydrogen becomes
a core energy carrier, reaching 81 Mtoe (over 50% of final energy). In parallel, captive clean
electricity from renewables and nuclear expands to about 17 Mtoe. By 2070, Net Zero Scenario
is dominated by hydrogen and low-carbon captive power, with fossil fuels playing only a residual
role broadly consistent with IEA Net Zero 2050 and Mission Possible Partnership pathways,
which envisage roughly half of steel energy from hydrogen and a steep reduction in coal use.
0
0.5
1
1.5
2
2.5
CPS NZS CPS NZS
2020 202520502070
tCO
2
/t
Figure 3.6: Emission intensity of steel sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 68
Industry Sector Modelling and Results
Emission Intensity: Emission intensity in both scenarios declines over time (Figure 3.6), but
the depth of reduction differs markedly, with the Net Zero Scenario reflecting an ambitious
decline compared to Current Policy Scenario (CPS). In CPS, emission intensity reduces by 44%
in 2050 and 62% by 2070 over 2.54 tonnes CO
2
/tonne of crude steel in 2025. However, in Net
Zero Scenario, emission intensity declines by 74% by 2050 and 95% by 2070, driven by a shift
towards low-carbon sources.
These outcomes illustrate how technology and fuel shifts translate into a deep reduction in
emissions intensity, and underscore the need for strong policy, investment, and infrastructure
support. The key barriers and enablers shaping this transition are outlined below.
Barriers and Enablers for Steel Sector Energy Transition
Challenges
a. Low-grade iron ores: Of India’s 24,058 Mt of hematite reserves, only 12% is high-
grade, 31% low-grade, and the rest medium (Ministry of Steel, 2024). Heavy reliance
on low-grade ore generates more slimes and fines, cutting plant efficiency and
raising emissions, while mining and crushing also cause iron losses.
b. Heavy reliance on BF-BOF: Current steel production depends heavily on the BF-BOF
route, which accounted for 44% of the crude steel production in 2021-22, compared
to 30% globally (IEA, 2020). Producing steel through this route is heavily coal-
dependent and carbon-intensive, with the Indian average at 2.36 tCO₂/tcs, while
globally, it ranges between 1.85 and 1.91 tCO₂/tcs. (Elango et al, 2023) (Ministry of
Steel, 2024).
c. High cost of new technologies: 100% hydrogen DRI-EAF has yet to be cost-
competitive at current hydrogen prices. Global studies show that hydrogen-based
DRI plants require around 30-40% higher capital investment cost and 15-25% higher
operating costs, assuming current green hydrogen prices (Eureka 2025).
d. CCUS technologies: embedded within the steel units can reduce 56% of the BF-BOF
emissions but cost between 45-60 USD/tCO₂ (Ministry of Steel, 2024). Moreover, for
CCUS technologies to succeed in India, pipeline networks and storage infrastructure
need to be built up. In 2025, Indian steel emits about 2.1 tCO₂/tcs (estimated), higher
than among global peers, leaving Indian steel vulnerable to CBAM kind of policies.
e. Availability of raw materials: Around 30 Mt of scrap was produced in 2020-21, well
below the requirement (PIB, 2023). Decarbonising steel will need to ensure a high
scrap mix in overall steel production.
f. Lack of global steel taxonomy: While India is the first to have a green steel taxonomy
in place, global standards will help harmonise emissions per tcs and increase demand
globally for low carbon steel (PIB, 2024)
g. Lack of willingness to pay green premium for steel: India’s price-sensitive market
shows limited readiness to pay more for low-carbon or “green” steel. This weak
demand signal discourages producers from making large investments in low-carbon
technologies and capacity upgrades Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 69
Industry Sector Modelling and Results
Suggestions
a. Scale up Electric Arc Furnace (EAF) route with a dedicated scrap policy: Scaling up
EAF will require a dedicated and robust framework for Scrap Policy that goes beyond
vehicle scrappage policy and includes segregation networks, formal scrap collection
targets, digital information of the scraps used, and a certification mechanism for
quality assurance.
b. Thermal Energy Management: Deepen specific thermal energy consumption targets
under CCTS, to promote adoption of technologies such as Coke Dry Quenching
(CDQ) & Top Gas Recovery Turbines (TRT) to recover pressure/heat
c. Blending hydrogen in BF-BOF: The transition plan should be to blend hydrogen in
BF-BOF plants through retrofitting in existing plants. In 2023, Tata Steel set up a
trial project to inject 40% hydrogen gas in the ‘E’ Blast Furnace in Jamshedpur, with
the potential to reduce 7-10% CO
2
per tonne of steel (Tata Steel, 2023).
d. Green route: GH
2
-DRI EAF route is the long-term solution to decarbonise the
steel industry. To improve the cost competitiveness of steel from this route, the
National Green Hydrogen Mission should bring in mechanisms to move from pilots
to commercial-scale projects leveraging blended financial structures.
e. Better use of low-grade iron ore: Beneficiation process needs to be promoted as
the efficient technology route for better utilisation of low-grade ore, especially by
Integrated Steel Plants (ISPs).
f. Incentivise green public procurement: The government should deploy Green
Public Procurement (GPP) to create early domestic demand for low-carbon steel in
infrastructure projects.
g. Harmonisation of Indian Steel Taxonomy: Aligning Indian definitions of “green steel”
with international taxonomies will safeguard competitiveness in global markets.
3.2.2 Cement
Projections for Cement Production
Cement production in India is projected using a logistic saturation model linked to economic
growth, following the methodology outlined in Section 3.1. Historically, per-capita cement
consumption in developed economies rose steeply during early phases of rapid infrastructure
and housing expansion, and gradually plateaued as economies matured. India is currently in this
accelerated growth phase of the S-curve. Figure 3.7 correlates per-capita cement consumption
with per-capita GDP, benchmarked against the experience of other large industrialising
economies.
Using this approach, India’s total cement production is projected to increase sharply through
mid-century before stabilising. Cement production is projected to increase from 451 Mt in 2025
to 1,590 Mt by 2050, and then gradually level off around 1,985 Mt by 2070 (see Figure 3.7).
This represents more than a threefold increase by 2050, driven by sustained demand from
housing, urban infrastructure, industrial corridors, transport networks, and supported by major
national programs such as Pradhan Mantri Awas Yojana (Housing for All), Smart Cities Mission,
Bharatmala and Sagarmala. The demand slightly tapers in the later period, with a 4.5x increase
by 2070 over 2025 levels. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 70
Industry Sector Modelling and Results
1800
1600
1400
1200
1000
800
600
400
200
0
10000020000 30000 40000 50000 60000 70000 80000
GDP per capita, PPP (constant 2021 international USD )
Cement per capita consumption (kg)
India
Vietnam
China
World Average
Brazil
Russia EU
Korea
Germany
USA
Figure 3.7: Global comparison of GDP/capita vs cement use/capita
Million Tonne
2000
1500
1000
500
0
2020202520502070
Figure 3.8: Cement production (million tonnes)
Scenarios
Two scenarios are examined for the cement sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption and
emission-mitigation ambition (See Table below) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 71
Industry Sector Modelling and Results
Table 3.2: Scenario assumptions for cement sector
Current Policy ScenarioNet Zero Scenario
Clinker Ratio Average clinker-to-cement
ratio declines moderately
from about 0.67 in 2024
to 0.6 by 2070, reflecting
gradual improvements and
no additional new binder
chemistries.
Average clinker-to-cement ratio falls to
0.55 by 2070, global best. This scenario
envisages large-scale deployment of low-
clinker binders such as LC3 (limestone
calcined clay cement), agro-residue ash,
and construction-and-demolition waste
powders, extending beyond traditional fly
ash/slag.
Carbon Capture,
Utilisation and
Storage (CCUS)
Only pilot projects are
considered because of the high
cost and limited policy support.
CCUS is deployed at scale from the 2040s
onward, capturing process CO₂ from large
kilns by 2070.
Specific Energy
Consumption (SEC)
In the context that Cement
plants in India are among
the global best, only 2%
improvement is considered
facilitated through increased
use of Waste Heat Recovery.
This scenario envisages 8% improvement
in SEC enabling through the deployment
of advanced precalciner designs, full
WHR coverage, oxy-fuel kilns, and digital
optimisation. Electrical efficiency also
improves via high-pressure grinding rolls
and vertical mills.
Share of Captive/
Grid
Share of captive: 52% (2025)
to 50% (2070), reflecting
conservative views wherein
the industry adds significant
captive fossil capacity to meet
the electric needs reliably.
Share of captive: 52% (2025) to 34%
(2050) and 20% (2070), reflecting a
gradual increase towards the use of Grid,
which is assumed to be low-carbon and
reliable.
Captive Fuel Mix Coal-based generation: 90%
(2025) to 52% (2050) and 40%
(2070), wherein coal continues
to be the dominant source
owing to reliability concerns.
Coal-based generation: 20% (2050) and
phased out by 2070 due to priority shift
towards renewables driven by ambitious
targets through CCTS, tightening of
taxonomy thresholds and decline in storage
costs for deploying RTC renewables.
Results
Energy Consumption: The cement sector’s final energy demand increases substantially in both
scenarios as clinker and cement output grow. Total final energy use rises from about 27 Mtoe
in 2025 to around 86 Mtoe in 2050 and 98 Mtoe in 2070 under Current Policy Scenario, and 81
Mtoe in 2050 and 89 Mtoe in 2070 under Net Zero Scenario (see Figure 3.9). This represents
a less than four times increase under the CPS and around three times increase under the NZS
relative to 2025, with savings in the latter scenario coming from deeper efficiency gains, lower
clinker ratios and higher use of supplementary cementitious materials. The difference in total
energy consumption between CPS and NZS is modest, as both scenarios still require high-
temperature kilns, so even a highly decarbonised cement system remains energy-intensive. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 72
Industry Sector Modelling and Results
100
80
60
40
20
0
Grid electricity Captive ElectricityCoal Natural Gas Pet-cokeBiomass
Mtoe
2020 2025
CPS
2050
NZSCPS
2070
NZS
Figure 3.9: Final energy consumption in cement sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
By 2050, both scenarios show a gradual shift away from pure fossil fuels, but with very different
end states by 2070. Under Current Policy Scenario (CPS), coal and petcoke continue to dominate
the fuel mix, providing around 79% of total final energy in 2050 and about 74% in 2070 Vs 85%
in 2025, with biomass and other alternative fuels playing a supporting role. Biomass would grow
to only about 13% of final energy by 2070, while grid and captive electricity together would
account for roughly 13%, mainly for grinding and auxiliaries. This pathway implies that most kilns
would still run on conventional fossil fuels, with alternative fuels constrained by waste-supply
logistics, quality issues, and weak policy push.
Under the Net Zero Scenario, the fuel structure is assumed to change in a transformative
manner. By 2050, coal and petcoke’s share of final energy would fall to about 62%, with biomass
providing roughly 25%, and the remainder from electricity and a small share of gas. By 2070,
biomass would contribute nearly 39%, while coal and petcoke’s share drops to 46%. Electricity
would supply close to 14% of final energy enabled by electrified equipment and CCUS systems.
This shift to clean fuels is mirrored in the captive power mix under Current Policy Scenario,
captive electricity in 2070 is projected to be about 60% coal-based and the remaining 40%
RE-based. Under NZS, captive supply becomes majority non-fossil by 2050 (only 20% coal)
and is fully non-fossil-based (including nuclear) by 2070.
These patterns imply that NZS requires not only technology change inside the plant (low-clinker
binders, CCUS-ready kilns) but also robust waste and biomass supply chains, co-processing
infrastructure, and coordination with the power sector to deliver firm low-carbon electricity.
Emission Intensities
Emissions intensity declines over time in both scenarios, but with a deeper reduction projected
under the Net Zero Scenario (NZS). In Current Policy Scenario (CPS), intensity is projected to
fall by 10% in 2050 and by 21% in 2070 from 0.61 tCO₂/t cement in 2025 (see Figure 3.10). Under Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 73
Industry Sector Modelling and Results
NZS, emission intensity is projected to fall by 26% by 2050 and 39% by 2070 as compared
to its value in 2025, reflecting the combined impact of lower clinker ratio and higher share of
clean fuels. Remaining emissions (majorly process emissions) in NZS will be captured through
carbon capture technologies to achieve full decarbonisation of the sector.
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
tCO
2
/tonne
2020 20252050
CPSCPSNZSNZS
2070
Figure 3.10: Emission intensity of cement sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Barriers and Enablers for Cement Sector Energy Transition
Challenges
a. High dependency on conventional fuels: for its thermal energy needs, as the
clinker calcination process requires high-calorific-value fuels capable of sustaining
consistently high kiln temperatures. In 2020-21, these fuels accounted for ~95% of
the energy demand in the production process (GCCA India-Teri, 2025).
b. High process emissions: The calcination process to produce clinker alone contributes
to 57-60% of the total emissions, followed by process heating accounting for 27-
30% (GCCA India-Teri, 2025). International experience shows that The capture cost
of cement plants is around USD 60-110 per tonne of CO
2
avoided (IEAGHG, 2019).
c. Limited adoption of new technologies: Existing Indian plants based on older rotary
kilns have higher energy intensity, and with very limited adoption of new technologies
like waste heat recovery systems (WHR) or pre-heaters for increasing efficiency.
Only 70% large cement plants out of 250 have WHR systems installed (EPCWorld,
2021). The challenge includes higher capital cost for smaller capacity plants and a
lack of financial incentives.
d. Limited financing availability: Depending on the WHR potential and the type of
technology adopted, the current installation cost stands at USD 1.4- 1.5 million per
MW in India (Mercomindia, 2023). Even emerging options such as carbon capture,
utilisation and storage (CCUS) remain very expensive. Significant capital will therefore
be required to support the low-carbon transition, including kiln electrification,
green-hydrogen-based kilns, pre-processing of low-carbon alternative fuels, and the
processing of new clinker substitutes or novel binders. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 74
Industry Sector Modelling and Results
Suggestions
a. Scale up alternative fuels: Creating a dedicated supply chain of segregated waste
for replacing coal and petcoke can encourage the adoption of waste-derived fuels
from municipal solid waste, plastic wastes, used tyres and industrial wastes.
b. Incentivise WHR: Incentivise adoption of WHR through recognition of WHR under
Renewable Consumption Obligations (RCOs).
c. Green Public Procurement (GPP) for infrastructure projects: Introducing GPP
for infrastructure projects can create an assured demand for low-carbon cement
products such as LC3.
d. Harmonisation of Cement Taxonomy: Aligning proposed Indian definitions of “Low-
carbon cement” with international taxonomies will safeguard competitiveness in
global markets.
e. CCUS: To address unavoidable process emissions in this sector, CCUS may
be prioritised, beginning with large modern plants, and supported by shared
infrastructure, targeted incentives, and robust regulatory frameworks.
3.2.3 Aluminium
Projections for Aluminium Production
Aluminium production in India is projected using a saturation-growth model, consistent with
the methodology described in Section 3.1, and analogous to projections for other stock-driven
materials such as steel and cement. Historically, per-capita aluminium consumption has increased
with income and industrialisation, and then plateaued as economies matured. In this study,
the model correlates historical aluminium use with per-capita GDP and applies high-income
benchmarks to define the saturation levels.
India’s per capita aluminium consumption is currently around 3–4 kg, compared to the global
average of 11-13 kg and China’s 25-30 kg, indicating vast headroom for growth (Aluminium
Extrusion Manufacturers Association India, 2025).
50
40
30
20
10
0
200004000060000800000
India
China
Korea
Germany
USAFrance
Japan
Aluminum consumption per capita (kg)
GDP per capita, PPP (constant 2021 international USD )
Figure 3.11: Global comparison of GDP/capita vs aluminium use/capita Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 75
Industry Sector Modelling and Results
Million Tonne
40
35
30
25
20
15
10
5
0
2020202520502070
Figure 3.12: Aluminium production (million tonnes)
With rising incomes and the push for industrialisation through Make in India and PLI schemes,
aluminium-intensive sectors such as power, infrastructure, transport (EVs, rail, aviation),
construction, packaging, and consumer durables are expected to grow. Aluminium demand
is accordingly expected to grow steeply and then gradually taper by mid-century. Modelling
results suggest that per-capita consumption could reach ~23–24 kg by 2070. With this, the
total aluminium production in India is projected to reach around 38 million tonnes by 2070
(see Figure 3.12).
Growth would be stronger, especially through the next three decades, supported by India’s
industrialisation and programs such as Make in India, PLI schemes, and the expansion of
renewables and electric mobility, all of which are aluminium-intensive. Such growth underlines
the need to plan for corresponding capacity expansion and resource supply (bauxite, power)
or increased imports.
Scenarios
Two scenarios are examined for the Aluminium sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption and
emission-mitigation ambition (See Table below) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 76
Industry Sector Modelling and Results
Table 3.3: Scenario assumptions for aluminium sector
Current Policy ScenarioNet Zero Scenario
Share of Scrap
Share of scrap remains at the 2025
level of 30% through 2070.
Share of scrap is assumed to increase
from 30% in 2025 to 40% by 2070
Anode Technology Remains same
Adoption of inert anodes leading to a
deep reduction in process emissions
Specific Energy
Consumption (SEC)
Improvement of 7.5% over 2025
through a moderate increase in
the use of non-fossil sources for
electricity generation
Improvement of 15% over 2025
through a rapid increase in the use
of non-fossil sources for electricity
generation and reaching global best
efficiency standards
Share of Captive/
Grid
Share of captive: 80% (2025) to 74%
(2050) and 70% (2070), reflecting
conservative views wherein the
industry adds significant captive
fossil capacity to meet the electric
needs reliably.
Share of captive: 80% (2025) to 57%
(2050) and 40% (2070), reflecting a
gradual increase towards the use of
Grid, which is assumed to be low-
carbon and reliable.
Captive Fuel Mix
Coal-based generation: 99% (2025)
to 53% (2050) and 40% (2070),
wherein coal will support the captive
RE owing to reliability concerns.
Coal-based generation: 20% in
2050 and phase out by 2070 due
to the shift towards renewables and
captive nuclear driven by ambitious
targets through CCTS, tightening of
taxonomy thresholds
Results
Energy Demand: While final energy demand rises strongly in both scenarios, its scale and
composition are expected to differ. Under the Current Policy Scenario (CPS), total final energy
use is expected to grow by almost six times from about 7.2 Mtoe in 2025 to 44 Mtoe in 2070.
Under the Net Zero Scenario, it would increase five times relative to 2025, reaching 37 Mtoe in
2070, a reduction of 16% compared to CPS (see Figure 3.13). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 77
Industry Sector Modelling and Results
50
45
40
35
30
25
20
15
10
5
0
Mtoe
Grid electricity
Captive ElectricityCoal Biomass
2020 202020502070
CPSCPSNZSNZS
Figure 3.13: Final energy consumption in aluminium sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
The Net Zero Scenario (NZS) pathway moderates this growth in energy consumption through
stronger efficiency improvements and a higher share of scrap aluminium. Even under the NZS,
aluminium remains one of the most energy-intensive industrial sectors, which implies that its
low-carbon transition would be closely tied to the pace and direction of the power sector’s
transition.
Fuel Mix:
Final energy use in aluminium is already electricity-heavy (73% in 2025) and continues to be
dominant; the key difference is how that electricity is produced. In Current Policy Scenario,
captive power remains dominant, with a significant share of coal. Non-fossil captive power (RE+
BESS) rises to 60% of the captive mix by 2070.
In Net Zero Scenario, electricity sourcing shifts steadily toward cleaner grid and non-fossil-
dominant captive sources. By 2050, around 80% of captive generation is non-fossil (80%
renewables and 20% nuclear), and by 2070, captive power is effectively 100% non-fossil,
split between 70% renewables and 30% nuclear (SMRs). This implies that deep aluminium
decarbonisation is contingent not only on efficiency and scrap, but on securing large volumes
of firm low-carbon power.
Emission Intensity
Emissions intensity is expected to fall in both scenarios, but Net Zero Scenario (NZS) would
deliver far deeper reductions. From an average intensity of 23.5 tCO₂/t aluminium in 2025, the
Current Policy Scenario (CPS) reduces emissions intensity by about 36% by 2050 and around
58% by 2070, while NZS could achieve a 58% reduction by 2050 and around 90% by 2070 (see Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 78
Industry Sector Modelling and Results
Figure 3.14). Achieving the NZS trajectory implicitly requires higher secondary aluminium shares,
deeper efficiency gains, a fully decarbonised captive power mix, and diffusion of low-emission
process technologies (such as inert anodes) to curb non-CO₂ emissions.
Emissions Intensity tCO
2
/tonne
2020 202020502070
CPSCPSNZSNZS
25
20
15
10
5
0
Figure 3.14: Emission intensity of aluminium sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Barriers and Enablers for Aluminium Sector Energy Transition
Challenges
a. Depleting high-grade bauxite ore: Given the shortage of bauxite ore, India needs to
look towards other available resources such as aluminium laterites, high silica and high iron
bauxites, which require additional processing for the production of alumina (Nandi, 2025).
b. Challenges for bauxite sourcing: A significant portion of India’s bauxite reserves lies
in indigenous community areas in Odisha, Jharkhand, and Chhattisgarh. Mining raises
livelihood issues.
c. Emission intensive: The aluminium sector in India has a higher emission intensity of
23.5 tCO₂ per tonne, far above the global average of ~16 tCO₂/t due to coal-dependent
electricity generation.
d. Low recycling rate: India’s recycling rate for aluminium products is around 25%, well
below the global average of around 60% (Shashikala, 2019).
e. Import duty disparity: The import duty on aluminium scrap is currently 2.5%, while it
is 7.5% for the primary metal. This makes imported scrap attractive, which subsequently
restricts local recycling (NITI Aayog, 2018).
f. Retrofitting or replacing carbon anodes: with inert ones is 9% more expensive than
conventional approaches (WEFORUM 2023). Inert anode technology is still at the pilot
stage.
Suggestions
a. Promote low-carbon, reliable electricity supply: Promoting a mix of RE + Storage
and Nuclear to ensure reliable power. The cost differentials need to be addressed
through specialised project structuring like use of Blended finance, Contract for
Differences (CfD), and Joint Ventures with Technology developers. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 79
Industry Sector Modelling and Results
b. Revise taxation/duty rules: to promote the domestic recycling industry.
c. Reuse waste and by-products: from aluminium production by promoting industrial
symbiosis- 1 tonne of aluminium production results in 2-3 tonnes of bauxite residue
and 2-5 tonnes of coal ash. These products can be utilised as feedstocks for cement
production and as construction material (Banerjee, 2017). Incentivising the offtake
of aluminium waste products may promote industrial symbiosis.
3.2.4 Textile
Projections for Textile Production
Future textile production in India is projected using a saturation-growth model, consistent with
the methodology described in Section 3.1. Historically, per-capita textile consumption rises with
income and urbanisation, then levels off as wardrobes saturate and lifestyles stabilise. For India,
the model links historical fibre uses to per-capita GDP and applies international benchmarks to
define long-run saturation levels. India’s current per-capita textile consumption is only 5 kg per
year, compared with 15 kg globally, indicating substantial potential for growth (Gupta, 2025).
As incomes rise, urbanisation deepens, and apparel and technical textile segments expand,
total fibre production is projected to increase from around 8 million tonnes (Mt) in 2020 to 53
Mt by 2050 and 61 Mt by 2070 (see Figure 3.15). While the demand increases by 8 times by
2070, the product mix is likely to tilt more towards technical and MMF-based textiles, altering
energy profiles (more electricity-intensive processes) and increasing the importance of reliable,
low-carbon power.
70
60
50
40
30
20
10
0
2020202520502070
Million Tonne
Figure 3.15: Textile sector production (million tonnes)
Scenarios
Two scenarios are examined for the Textile sector: the Current Policy Scenario (CPS) and the
Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption and
emission-mitigation ambition (See Table below) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 80
Industry Sector Modelling and Results
Table 3.4: Scenario assumptions for textile sector
Current Policy ScenarioNet Zero Scenario
Share of MMF
vs Natural
Fibres (Cotton
Dominant)
Share of MMF is expected to improve from 27% in 2023 to 70% by 2070, driven
by the government’s dedicated technical textiles mission and evolving consumer
preferences. This shift also aligns with the global fibre mix, where MMF account for
almost 72% in 2022.
The projections also account for land constraints, especially for growing cotton,
and assume that average cotton yield will also improve by three times from 450-
500 kg/ha (China's current yield: 2172 kg/ha in 2024)
Specific
Energy
Consumption
(SEC)
Improvement of 20% over 2025 through
incremental upgrades in MSMEs and
gradual diffusion of efficient motors,
improved controls, and better steam/
heat management
Improvement of 27% over 2025 through
broader deployment of best-available
technologies (VFDs, efficient looms, low-
liquor dyeing, heat recovery, and digital
process optimisation)
Electrification
of the Thermal
Process
Limited electrification of thermal
processes and continued reliance on
steam boilers
Accelerated electrification through the
use of heat pumps and electric boilers
supported by policy incentives and
stricter emissions standards.
Share of
Captive/Grid
Share of captive: 35% (2025) to 32%
(2050) and 30% (2070), reflecting
conservative views wherein the industry
adds significant captive fossil capacity
to meet the electric needs reliably.
Share of captive: 35% (2025) to 26%
(2050) and 20% (2070), reflecting
a gradual increase towards the use
of Grid, which is assumed to be low-
carbon and reliable.
Captive Fuel
Mix
Coal-based generation: 80% (2025) to
50% (2050) and 40% (2070), wherein
coal continues to be the dominant
source owing to reliability concerns.
Coal-based generation: 20% (2050)
and 0% (2070) due to a priority shift
towards renewables driven by a decline
in storage costs for deploying RTC
renewables.
Results
Energy Consumption: Final energy consumption in the textiles sector is projected to rise strongly
in both scenarios as fibre demand grows and processing volumes expand. Total final energy use
increases from about 7.8 Mtoe in 2025 to 5.4 times under Current Policy Scenario (CPS) versus
4.5 times under Net Zero Scenario (NZS) by 2070 (see Figure 3.16). The NZ pathway moderates
this growth through sector-specific efficiency measures, faster modernisation of MSME clusters,
wider adoption of best-available spinning and weaving machinery, and process innovations in
wet processing such as dope-dyed MMF (which avoids conventional dyeing), low-liquor and
foam dyeing, and emerging supercritical CO₂ dyeing technologies that sharply cut steam and
water use. In addition, greater recovery of waste heat from stenters and thermic fluid heaters,
and gradual electrification of drying/finishing, reduce thermal energy demand per kg of fabric.
Fuel Mix: Under the Current Policy Scenario (CPS), coal remains the backbone of thermal
energy and captive power. In 2050, coal continues to provide about 38% of total final energy
(vs 40% in 2025), with 14% biomass supplementing it. By 2070, coal would supply around 36%,
and the biomass share is projected to rise to 17%. In Net Zero Scenario (NZS), the thermal mix
shifts decisively towards low-carbon sources. By 2050, coal’s share in total final energy falls
to 29%, while biomass rises to 28%. By 2070, coal is fully eliminated from both direct thermal
use and captive generation, with biomass supplying more than half of total final energy, and
electricity remaining, with captive power being 100% RE. This implies that textile low-carbon Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 81
Industry Sector Modelling and Results
transition hinges on scaling up reliable biomass supply chains, RE for clusters, and shared
modern boiler/steam infrastructure to serve MSME units.
45
40
35
30
25
20
15
10
5
0
Mtoe
2020 202020502070
CPSCPSNZSNZS
Grid electricityFuel oil Non-coking coalCaptive ElectricityBiomass
Figure 3.16: Final energy consumption in textile sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
Emission Intensity: Under the Current Policy Scenario (CPS), emissions intensity reduces by
around 41% by 2050 and about 66% by 2070 over 2025 levels. Under Net Zero Scenario (NZS),
the reduction reaches 64% by 2050 and effectively 100% by 2070, approaching Net Zero
emissions per tonne of textile output (Figure 3.17). Achieving this NZS trajectory requires the
combined effect of Specific Energy Consumption (SEC) improvements, a complete phase-out of
fossils from process heat and captive power, widespread renewable and biomass deployment in
clusters, while increasing the use of circular and recycled fibres as final textile demand continues
to grow.
6
5
4
3
2
1
0
tCO
2
/tonne
CPSCPS
2050202020252070
NZSNZS
Figure 3.17: Emission intensity of textile sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 82
Industry Sector Modelling and Results
Barriers and Enablers for Textile Sector Energy Transition
Challenges
a. Dependence on fossils for thermal energy: Industrial heat for washing, cleaning
of cotton, bleaching and dyeing primarily comes from fossil fuels (Apparel Impact
Institute 2025)
b. High wastewater generation: Dying and washing processes generate large quantities
of wastewater (Holkar et al. 2016).
c. Capital and technology gaps in fragmented SMEs: India’s textile sector consists
largely of numerous small and medium enterprises (SMEs). These dispersed units
often struggle to access affordable finance, acquire modern energy-efficient
machinery, and keep pace with emerging low-carbon technologies and best practices
d. Low adoption of advanced dyeing and finishing technologies: Equipment such as
digital/ink-jet printing and automated process controls is not commonly adopted,
especially by older mills, leading to excessive energy and water use compared with
best-practice benchmarks (Rahaman, 2024).
e. Skill gap in the sector: A large share of India’s textile and apparel MSMEs lack the
technical skills and capabilities for low-carbon transition, circular-economy practices,
and ESG reporting, limiting their ability to adopt low-carbon technologies and access
green finance (SwitchAsia, 2025).
Suggestions
a. Promote sustainable fibres: through product labelling enabled by digital passports
targeting niche markets
b. Scale ADEETIE scheme:
using ESCO/RESCO models, ADEETIE can bundle interest
subvention, energy audits, DPRs, and M&V to deliver priority retrofits (e.g., heat pumps,
variable-speed drives, waste-heat recovery) and on-site clean power with low upfront costs.
c. Develop an electrification map: linking temperature ranges, processes, and available
electrification technologies.
d. Promote circularity in the textile industry: The textile industry generates tonnes of
waste 7,793 kt annually (Recircle, 2025). Part of the projected demand can be met
by recycled fibres, incentivised through product labelling and expanding the EPR
framework, including setting recovery targets.
e. Develop Lifecycle repository and Product Category rules: to de-risk India’s exports
from emerging global developments, such as EcoDesign for Sustainable Product
Regulations by the EU.
3.2.5 Paper and Pulp
Projections for Paper and Pulp Production
To project future demand, a statistical relationship is developed between per capita paper
demand and GDP per capita. A linear regression model, explained in Section 3.1, is used for
this. The regression parameters are derived from historical data of per capita paper production
and GDP per capita. It is projected that Paper Production will increase with a CAGR of 2.5%
between 2021-22 and 2069-70, reaching about 73 Mt in 2070 (Figure 3.18). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 83
Industry Sector Modelling and Results
RCF-BasedAgro-BasedWood-Based
80
60
40
20
0
Million Tonne
Projections for Paper and Pulp Production
Figure 3.18: Projections for paper and pulp production (million tonnes)
Scenario Assumptions:
Two scenarios are examined for the paper and pulp sector: the Current Policy Scenario (CPS)
and the Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption
and emission-mitigation ambition (See Table below).
Table 3.5: Scenario assumptions for paper and pulp sector
Current Policy ScenarioNet Zero Scenario
Share of Production
using Wood/Agro/RCF
Remains the same as in 2025
across the years (RCF:75%,
Wood:19% and Agro:6%)
Share of recycled fibre improves
moderately by 2070 (RCF:80%,
Wood:17% and Agro:3%)
Specific Energy
Consumption (SEC)
Average efficiency improves
to reach India’s best available
technology
Wood-based: 1,400 kWh/t
(Electrical) and 27.3 GJ/t (Thermal)
Agro-based: 1,200 kWh/t
(Electrical) and 27.3 GJ/t (Thermal)
RCF-based: 600 kWh/t (Electrical)
and 11.3 GJ/t (Thermal)
Average efficiency improves to reach
the global best available technology
Wood-based: 1,000 kWh/t
(Electrical) and 27.3 GJ/t (Thermal)
Agro-based: 1,200 kWh/t (Electrical)
and 27.3 GJ/t (Thermal)
RCF-based: 500 kWh/t (Electrical)
and 11.3 GJ/t (Thermal)
Fuel MixShare of electricity: Improves from
20% (2025) to 38% (2050) and
53% (2070)
Share of biomass: Improves from
16% (2025) to 18% (2050) and
20% (2070)
Share of electricity: Improves from
20% (2025) to 50% (2050) and 75%
(2070)
Share of biomass: Improves from
16% (2025) to 20% (2050) and 25%
(2070) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 84
Industry Sector Modelling and Results
Results
Energy Consumption
Final energy consumption in the paper and pulp sector is projected to rise in both scenarios as
this sector expands. Based on the assumption highlighted above, the final energy consumption
in the paper and pulp industry increases by more than three times from 10.9 Mtoe in 2025
to 33 Mtoe by 2070 in Current Policy Scenario (CPS) (see Figure 3.19). In Net Zero Scenario
(NZS), the rise in energy consumption moderates due to higher electrification and efficiency
improvements, including advanced process control, high-efficiency equipment, waste heat
recovery, and increased use of cogeneration. Total final energy consumption in NZS is projected
to reach 28.5 Mtoe by 2070, a reduction of 14% as compared to CPS.
Fuel Mix
In the Current Policy Scenario (CPS), while the share of clean energy increases, the fuel mix by
2070 remains partially reliant on fossil fuels, with around 30% of total energy consumption still
derived from fossil sources. The share of electrical energy and biomass increases from 17% and
16% in 2023 to 35% and 18% in 2050 and 53% and 20% by 2070. In Net Zero Scenario (NZS),
the industry undergoes a dramatic shift in fuel mix with fossil fuel being eliminated from both
electricity generation and thermal use. Biomass supplies almost 25% of energy consumption,
and the remaining 75% is shifted to electricity. Further, 100% of captive electricity used for
operations is expected to come from renewable-based generation. This implies that low-carbon
transition of the paper and pulp industry will require coordinated development of biomass
supply chains, RE-enabled industrial clusters, increased use of recycled fibre, electrification of
low and medium temperature process via common high-efficiency thermal infrastructure for
MSMEs.
Biomass Non-Coking Coal Electricity
CPSCPS
2050202020252070
NZSNZS
Final Energy Consumption
40
35
30
25
20
15
10
5
0
Mtoe
Figure 3.19: Final energy consumption in pulp and paper sector (Mtoe) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 85
Industry Sector Modelling and Results
Emission Intensity: The emission intensity of paper and pulp industry production is around 1.98
tCO
2
/t in 2025. Under the Current Policy Scenario (CPS), the paper industry remains a significant
source of industrial CO₂ emissions till 2050. However, with the energy efficiency improvement
and increased electrification and biomass penetration, the emission intensity will drop to 1.04
CO
2
/t by 2070, a reduction of 48% from 2025 (Figure 3.20). In the Net Zero Scenario (NZS),
emissions are reduced to near zero by 2070. This is achieved through rapid electrification using
low-carbon electricity, higher improvement in Specific Energy Consumption (SEC) and higher
penetration of cleaner fuel like biomass as compared to Current Policy Scenario.
2.5
2
1.5
1
0.5
0
tCO
2
/tonne
CPSCPS
20502020 20252070
NZSNZS
Emission Intensity
Figure 3.20: Emission intensity of paper & pulp sector (tCO
2
/t) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
Barriers and Enablers for Paper and Pulp Sector Energy Transition
Challenges
a. High raw-material costs: Waste paper, imported pulp, and wood chips remain
expensive, forcing producers to raise product prices and face reduced profitability
(Resourcewise 2024)
b. Outdated technologies: Outdated technologies that raise production costs, lower
product quality, increase pollution, and limit economies of scale (GOI 2014).
c. Capital-intensive boiler upgrades: Installing modern recovery boilers requires heavy
capex that many Indian mills cannot easily finance.
d. Unreliable biomass and fibre supply: Competition for agro-residues and plantation
wood, coupled with seasonal availability and transport bottlenecks, makes it hard
for mills to secure consistent low-carbon fuel and certified raw material.
e. Low market demand for eco-labelled paper: Domestic buyers rarely pay more for
Forest Stewardship Council (FSC)-certified or low-carbon paper, lowering incentives
for mills to invest in low-carbon transition. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 86
Industry Sector Modelling and Results
Suggestions
a. Energy efficiency improvement: The pulp and paper industry needs to invest in
energy-efficient technologies such as vacuum blowers, shoe presses, advanced process
controls and monitoring, micro turbines, oxy-fuel lime kilns, waste heat, steam and
condensate recovery, to enhance energy efficiency (IPPTA, 2023). The ADEETIE scheme
can facilitate shift to use of these technologies, and scale can be achieved by deploying
ESCO business models along with use of ADEETIE scheme benefits.
b. Electrification of Steam: use of electric boilers or high-temperature heat pumps to
generate the large volumes of process steam (Joyo 2025). This can be supported by
VGF till TCO parity. For electricity boilers, enable demand aggregation and access to
low-cost RE electricity.
c. Enhance Green Energy from use of Black Liquor: Integrated pulp and paper mills
should increase the solid concentration of black liquor to 72–73 % before firing in
recovery boilers. Higher-solid firing raises the liquor’s calorific value, allowing mills to
generate more renewable steam and electricity (India GHG Program 2016).
3.2.6 Ethylene
Projections for Ethylene Production
Future ethylene production in India in 2047 is projected to reach about 31 million tonnes,
applying a CAGR of 7.4%, observed over the last decade. Beyond 2047, as India’s demand
growth stabilises, ethylene production is assumed to approach saturation and grow at a much
slower rate. As shown in Figure 3.21, total ethylene production in India is projected to reach
approximately 38 million tonnes per year by 2070.
Million Tonnes
45
40
35
30
25
20
15
10
5
0
2020202520502070
Figure 3.21: Projection of ethylene production in India (million tonnes)
Scenario Assumptions Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 87
Industry Sector Modelling and Results
Two scenarios are examined for the Ethylene sector: the Current Policy Scenario (CPS) and the
Net Zero Scenario (NZS), with differences explained in the table below.
Table 3.6: Scenario assumptions for ethylene sector
Current Policy ScenarioNet Zero Scenario
Share of Production
using Naphtha vs
Ethane
Share of Ethane: improves marginally
from 55% in 2025 to 60% by 2070
Share of Ethane: improves from
55% in 2025 to 65% by 2050 and
70% by 2070.
Growing use of ethane-based
production is driven by superior
cost economics, higher ethylene
yields, lower capital requirements,
and a comparatively smaller
carbon footprint
Fuel MixCaptive/Grid electricity: Share of
captive moderately declines from 80%
in 2025 to 50% by 2070. Further,
within captive, from dominantly fossil
in 2025, there will be a gradual shift
towards non-fossil fuels whose share
increases to 60% by 2070.
Captive/Grid electricity: Share
of captive declines from 80% in
2025 to 30% by 2070. Further,
the entire captive power will be
a non-fossil-based electricity
system by 2070.
Results
Based on the assumption highlighted above, the final energy demand for ethylene production
increases by 9 to 11 times from 17 Mtoe in 2025 to 100 Mtoe in Current Policy Scenario and 96
Mtoe in Net Zero Scenario (Figure 3.22). By 2070, the fuel mix for ethylene production in both
scenarios remains predominantly fossil fuel-based due to the essential role of feedstocks in the
production process.
Under the Current Policy Scenario (CPS), naphtha continues to be the dominant input, with
natural gas use projected to increase. Electricity would contribute only a small share, primarily for
operational needs rather than as a major energy source. Under the Net Zero Scenario (NZS), there
is a marked shift from naphtha to natural gas, reflecting a move toward relatively cleaner fossil
fuels. However, despite this shift and the gradual rise in electricity use, fossil fuels would still form
the bulk of the energy mix, driven by the continued dependence on hydrocarbon feedstocks. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 88
Industry Sector Modelling and Results
Fuel Consumption in Ethylene Production
2020 202520502070
CPSCPSNZSNZS
Naptha Grid ElectricityCaptive ElectricityNatural Gas Ethane
Mtoe
120
100
80
60
40
20
0
Figure 3.22: Final energy consumption in ethylene (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Emissions
The emission intensity of ethylene production in India is about 1.91 tCO₂/t in 2025. It includes
both process emissions and energy-related emissions. In this sector, the process emissions
account for more than 60% of the total emissions, which are difficult to mitigate and require
carbon capture technologies. For the balance energy emissions, efforts like shifting fossil-fuel
based thermal energy to electricity-based heat and utilising RE-based power in captive plants
would be required. The emission intensity in Current Policy Scenario (CPS) is projected to reach
1.85 tCO
2
/t of production. Under the Net Zero Scenario (NZS), this would reduce to 1.45 tCO
2
/t
due to greater efforts towards cleaner fuel and clean electricity (Figure 3.23).
Emission Intensity (tCO
2
/tonne)
2020202520502070
CPSCPSNZSNZS
tCO
2
/tonne
2.5
2.0
1.5
1.0
0.5
0
Figure 3.23: Emission intensity of ethylene sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 89
Industry Sector Modelling and Results
Barriers and Enablers for Ethylene Sector Energy Transition
Challenges
a. Dependence on fossil fuels for high-temperature heat: Steam cracking requires
heat exceeding 850°C, traditionally generated by burning fossil fuels (methane/off-
gas) in furnaces, accounting for almost 90% of the process CO
2
emissions.
b. High carbon footprint of feedstocks: The sector relies heavily on fossil-based
feedstocks (naphtha, ethane), which have embedded carbon. Naphtha route emits
around 1.73 tCO
2
while the ethane route emits 0.76 tCO
2
per tonne of ethylene
production, creating a significant carbon lock-in.
c. High capital intensity and asset inertia: Ethylene plants are massive, capital-intensive
assets with long lifespans (30–50 years). Retrofitting these facilities for low-carbon
technologies (like CCUS or e-cracking) requires large capital (WEF, 2024).
d. Technological gaps in electrification scale-up: While electric cracking is a promising
alternative, it faces hurdles in heat management, material durability, and sourcing of
stable green power. Commercial-scale deployment is still in the pilot/early-adoption
phase (360iResearch 2025).
e. Linear consumption and plastic waste: The downstream use of ethylene (polyethene)
generates large-scale plastic waste. India faces significant challenges in segregation
and logistics, with contamination limiting the supply of quality feedstock for recycling
(TERI, 2021).
f. Process emissions and flaring: Beyond energy use, fugitive emissions and flaring
during startup/shutdown contribute to the environmental footprint. CO
2
is also a
byproduct in some reaction pathways, necessitating management.
g. Skill and integration gap: The shift to electric furnaces, hydrogen firing, and circular
feedstocks requires new technical competencies. The current workforce lacks
specialised skills in power electronics and in managing variable bio/waste feedstocks
(ReAnIn, 2024).
Suggestions
a. Switch to renewable process heat (Electrification): Replace gas-fired furnaces
with electric steam crackers (e-crackers) powered by RE to reduce emissions.
(360iresearch 2025; ScienceDirect 2024).
b. Adopt sustainable feedstocks: Transition to bio-naphtha and bio-ethanol (dehydration
to ethylene). Innovations in fermentation have improved yield efficiency by 30%,
making bio-ethylene a viable low-carbon alternative (ReAnIn, 2024). Incentivise
adoption through an assured offtake mechanism.
c. Adoption of advanced separation technologies: Replace energy-intensive distillation
with membrane separation and adsorption technologies for olefin-paraffin separation.
This reduces the energy demand for downstream purification, a major energy
consumer in ethylene plants (IEA, 2024).
d. Deploy Carbon Capture, Utilisation, and Storage (CCUS): Install carbon capture
units on cracker flue gas stacks. Captured CO
2
can be utilised to produce methanol
or stored (WEF, 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 90
Industry Sector Modelling and Results
e. Build capacity for Green Chemistry: Establish industry-academia partnerships to
train the workforce in electrochemistry, hydrogen safety, and circular supply chain
management. Training programs must focus on the operational nuances of e-furnaces
and handling variable quality recycled feedstocks (360iResearch, 2025).
3.2.7 Chlor-Alkali
Projections for Chlor-Alkali Production
The chlor-alkali sector analyses key products including Caustic Soda, Soda Ash, and Liquid
Chlorine. Future demand is projected using a univariate regression model wherein per-capita
demand is determined based on per-capita GDP. Based on this, Caustic Soda production is
projected to increase with a CAGR of 5.3% between 2023-24 and 2049-50 and a CAGR of 3.31%
between 2049-50 and 2069-70, reaching about 14 Mt by 2050 and about 27 Mt by 2070. About
18.8 Mt of liquid chlorine, a co-product of caustic soda, would be produced in 2070. Soda Ash
production is projected to increase with a CAGR of 3.8% between 2023-24 and 2049-50, and
a CAGR of 2.68% between 2049-50 and 2069-70, reaching about 8 Mt by 2050 and about 13
Mt by 2070 (Figure 3.24).
Million Tonnes
Caustic Soda Soda Ash Liquid Chlorine
70
60
50
40
30
20
10
0
2020202520502070
Figure 3.24: Chlor-Alkali products production (million tonnes)
Scenarios
Two scenarios are examined for the Chlor-Alkali sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), with differences explained in the table below: Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 91
Industry Sector Modelling and Results
Table 3.7: Scenario assumptions for chlor-alkali sector
Current Policy ScenarioNet Zero Scenario
Specific Energy
Consumption (SEC)
Average efficiency improves
to reach India’s best available
technology
Caustic Soda: Improves from 15.5
GJ/ton in 2025 to 13.28 GJ/ton
by 2070
Soda ash: Improves from 8.54
GJ/ton in 2025 to 7.61 GJ/ton by
2070
Average efficiency improves to
reach the global best available
technology
Caustic Soda: Improves from 15.5
GJ/ton in 2025 to 11.72 GJ/ton by
2070
Soda ash: Improves from 8.54
GJ/ton in 2025 to 6.86 GJ/ton
by 2070
Fuel MixCaptive/Grid electricity: Share
of captive declines from 80% in
2025 to 60% by 2070.
Further, within captive, from
dominantly fossil in 2025, there
will be a gradual shift towards
non-fossil fuels, whose share
increases to 40% by 2070.
Captive/Grid electricity: Share
of captive declines from 80% in
2025 to 40% by 2070.
Further, the entire captive
power will be a non-fossil-based
electricity system by 2070.
Results
Final Energy Consumption
The final energy consumption for Chlor-Alkali (Caustic Soda+Soda Ash) increases from 2 Mtoe
in 2025 to 11.7 Mtoe in Current Policy Scenario (CPS) and 9.4 Mtoe in Net Zero Scenario (NZS)
by 2070. Figures 3.25 and 3.26 provide the fuel-wise consumption separately for Caustic Soda
and Soda Ash. Electrification while increases from 44% in 2025 to 65% in CPS by 2070, the
role is greater with almost 80% electrification in 2070 in NZS across the Chlor-Alkali Industry.
Biomass Fuel Oil Non-Coking Coal Natural Gas Grid ElectricityCaptive Electricity
Fuel Consumption in Caustic Soda Production
2020202520502070
CPSCPSNZSNZS
Mtoe
10
9
8
7
6
5
4
3
2
1
0
Figure 3.25: Final energy consumption in caustic soda industry (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 92
Industry Sector Modelling and Results
Mtoe
Fuel Oil Non-Coking Coal Grid ElectricityCaptive Electricity
Fuel Consumption in Soda Ash Production
3
2.5
2
1.5
1
0.5
0
2020202520502070
CPSCPSNZSNZS
Figure 3.26: Final energy consumption in the soda ash industry (Mtoe) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS)
Emission Intensity:
The emission intensity of caustic soda and soda ash production in India is 2.9 tCO
2
/t and 1.28
tCO
2
/t of production in 2025. Soda ash accounts for 25% of India’s IPPU emissions. Under
the Current Policy Scenario (CPS), emission intensities are expected to drop to 1.18 tCO
2
/t for
caustic soda and 1.05 tCO
2
/t for soda ash in 2070. The chlor-alkali industry would thus remain
a significant source of industrial CO₂ emissions even in 2070 (Figure 3.27).
In the Net Zero Scenario (NZS), emissions intensities in 2070 would be 94% lower for caustic
soda and 74% lower for soda ash as compared to CPS. This would be achieved through rapid
electrification using low-carbon electricity and greater improvement in SEC. The lower reduction
in the case of soda ash is due to a continued rise in process emissions.
Emission Intensity: Caustic Soda
2020 2025 2050 2070
CPSCPSNZSNZS
tCO
2
/t
3.5
3
2.5
2
1.5
1
0.5
0
Emission Intensity: Soda Ash
2020 2025 2050 2070
CPSCPSNZSNZS
tCO
2
/t
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Figure 3.27: Emission intensities for caustic soda (left) and Soda Ash (right) (tCO
2
/t) under
Current Policy Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 93
Industry Sector Modelling and Results
Barriers and Enablers for Chlor-Alkali Sector Energy Transition
Challenges
a. Emissions from coal-based power: Although chlor-alkali production is electrified
(JMK Research & Analytics, 2025), much of this is power sourced from the grid or
coal-based captive sources, leading to significant Scope 2 emissions.
b. High energy costs and price fluctuations: Energy costs make up 60–70% of
production costs, impacting industry competitiveness at the time of electricity price
volatility.
c. Surplus chlorine challenge: Caustic soda production generates excess chlorine, but
low downstream demand and its hazardous nature create storage and utilisation
challenges (Harish, 2024).
d. Underutilised hydrogen by-product: Hydrogen generated as a by-product of brine
electrolysis often goes underutilised or wasted.
e. Brine quality issues: The process requires purified water and high-quality brine; poor
brine quality lowers efficiency and increases energy use, scaling and maintenance
issues.
f. Barriers for smaller manufacturers: Small and medium-sized manufacturers lack the
necessary resources to invest in energy-efficient technologies or renewable power,
slowing overall sector-wide low-carbon transition.
Suggestions
a. Shifting from mercury to advanced cell technology: Shifting to membrane cell
technology has already reduced 25% electricity consumption (Kermeli & Worrell,
2025). Further energy savings are possible with next-generation technologies like
oxygen-depolarised cathodes (ODCs) and bipolar membranes, supported through
R&D partnerships and providing tax benefits to early adopters.
b. Flexible operations with RE: Procuring RE through long-term PPAs, captive solar
or wind projects or the RESCO model can cut emissions and reduce exposure to
power price volatility.
c. Utilising surplus chlorine in downstream industries: Expanding downstream linkages
to utilise surplus chlorine for PVC, solvents, or bleaching agents, leveraging shared
infrastructure with the support of Industry groups such as the Alkali Manufacturers
Association of India (AMAI). Researchers have found that setting up a 150,000 Mt/
year PVC plant could use up to nearly 45% of residual chlorine from chlor-alkali
plants in Bangladesh, and turn the waste problem into a feedstock solution, cutting
storage risks and adding to profits (Roy et al, 2022).
d. Utilising hydrogen for decarbonisation: Generated hydrogen can be used to produce
hydrogen peroxide or as fuel for power generation and fuel cell vehicles (Roy et al.,
2022). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 94
Industry Sector Modelling and Results
3.2.8 Fertiliser
Projections for Fertiliser Production
Fertiliser demand in India is projected using the methodology widely adopted and shared
by the Fertiliser Association of India. The detailed methodology for arriving at projections
for major fertiliser production in India through 2070 is provided in Annexure IV. Fertiliser use
is derived from food grain requirements, which are estimated based on population growth
projections. Based on this actual fertiliser nutrient requirement, demand and supply of major
fertiliser products, namely urea, DAP, and complex fertiliser, have been projected (Figure 3.28).
Million Tonnes
Urea DAP Complex Fertiliser
80
70
60
50
40
30
20
10
0
2020202520502070
Figure 3.28: Major fertiliser products production (million tonnes)
Production of urea, DAP and complex fertilisers during 2023-24 was 31.41 Mt, 4.29 Mt, and 9.54
Mt, respectively. Based on the methodology described in the Annexure and assuming a level of
self-sufficiency, indigenous supply projections of these major fertiliser products are estimated,
as shown in Figure 3.28.
Scenarios
Two scenarios are developed to assess low-carbon transition pathways for the fertiliser sector:
a Current Policy Scenario (CPS), reflecting continuation of existing policies and measured
technology uptake, and a Net Zero Scenario (NZS) aligned with India’s 2070 Net Zero emissions
goal. Both scenarios assume the same growth in fertiliser production but differ fundamentally
in their assumptions of energy efficiency, fuel use and electricity sourcing.
Table 3.8: Scenario assumptions for fertiliser sector
Current Policy ScenarioNet Zero Scenario
Specific Energy
Consumption SEC
Average efficiency improves
to reach India’s best available
technology with 0.4%
improvement per year till 2070
Average efficiency improves to
0.6% every year till it reaches the
CPS, 2070 value and saturates
after this. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 95
Industry Sector Modelling and Results
Current Policy ScenarioNet Zero Scenario
Green HydrogenUptake remains limited until after
2040, when green hydrogen
becomes commercially viable,
and deployment accelerates to
70% by 2070.
Penetration rises to near 90% by
2070 with strong uptake from
2030, enabling near complete
low-carbon transition of ammonia
production.
Electricity Supply Captive generation continues to
provide around 70% of electricity
consumption in 2070 (same as in
2025). However, within captive,
from dominantly fossil in 2025,
there will be a gradual shift
towards non-fossil fuels, whose
share increases to 60% by 2070.
Captive generation continues to
provide around 70% of electricity
consumption in 2070 (same as
in 2025). However, the entire
captive power will be a non-
fossil-based electricity system by
2070.
Results
Energy Demand: The fertiliser sector’s final energy demand will grow substantially with higher
production, but the scenarios diverge in magnitude. Under the Current Policy Scenario (CPS),
total final energy consumption by fertiliser would rise from 19 Mtoe in 2025 to about 25 Mtoe
(treating green hydrogen and captive electricity consumption as part of fuel rather than energy
required to generate them) in 2070 (Figure 3.29). This 1.3 times increase would be driven by
expansion of output, but partially offset by incremental efficiency gains.
Under the Net Zero Scenario (NZS), energy demand in 2070 would be lower due to higher green
hydrogen penetration, which replaces the natural gas required to generate gey hydrogen, reaching
around 23.5 Mtoe in 2070. Simultaneously, the share of grid electricity would increase while
captive electricity generation would shift from coal to renewables, aligning with the Net Zero
trajectory.
Mtoe
Natural Gas Green Hydrogen Grid ElectricityCaptive Electricity
2020 202520502070
CPSCPSNZSNZS
30
25
20
15
10
5
0
Figure 3.29: Final energy consumption of major fertiliser products (Mtoe) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 96
Industry Sector Modelling and Results
Emission Intensity
The production of ammonia, the key feedstock for fertilisers, is highly dependent on fossil
fuels, resulting in significant CO₂ emissions from hydrogen generation and process energy use.
In contrast, urea production uniquely utilises CO
2
as a feedstock, making it a partial CO
2
sink
within the fertiliser value chain. During urea synthesis, CO
2
reacts with ammonia to form urea,
resulting in the utilisation of approximately 0.73 tCO
2
/t urea produced (as considered in this
study). Considering this sink of CO
2
during the urea production process, the average emission
intensity of fertiliser production is estimated at around ~0.56 t CO
2
/t of fertiliser production
(Figure 3.30).
CPSCPSNZSNZS
2050202520202070
Emission Intensity (tCO
2
/tonne)
tCO
2
/tonne
0.8
0.6
0.4
0.2
0
-0.2
-0.4
-0.6
Figure 3.30: Emission intensity of the fertiliser sector (tCO
2
/t)
With energy transition and low-carbon transition measures discussed above, emissions intensity
would decline over time under both scenarios, although the magnitude of reduction would vary
significantly. Under the Current Policy Scenario (CPS), emissions intensity would decrease by
about 32% by 2050, driven by incremental efficiency improvements and a gradual shift towards
green hydrogen and renewable energy. This reduction would deepen substantially to 88% by
2070, reflecting more widespread adoption of low-carbon technologies and cleaner energy
sources.
Under the Net Zero Scenario, grey hydrogen-based ammonia synthesis will be largely replaced
by green hydrogen by 2070. This transition would eliminate most process-related CO₂ emissions
associated with hydrogen generation, fundamentally altering the carbon profile of the fertiliser
sector. Accounting for CO₂ utilised as a feedstock during urea production would mean that the
fertiliser production process could shift to a net sink. With the continued incorporation of CO
2
in
urea synthesis, combined with near-zero-emission hydrogen and cleaner energy inputs, fertiliser
manufacturing could play a carbon-absorbing role within industrial systems, highlighting its
potential contribution to long-term Net Zero pathways. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 97
Industry Sector Modelling and Results
Barriers and Enablers for Fertiliser Sector Energy Transition
Challenges
a. High import dependence of raw materials: India currently imports all of the muriate
of potash (MOP), 90% of phosphate, and 25% of urea demand (Randive et al., 2022)
b. Low efficiency of plants: The average technical efficiency of fertiliser plants stands
at 57%, hinting at a significant scope for improvement (Khan, 2017). Energy intensity
in some fertiliser production plants is very high (12.6-12.7 Gcal/t of urea) compared
with the norm of 5.5 Gcal/Mt of urea (Oak, 2022).
c. Disproportionate nutrient use: Despite the NBS (Nutrient-Based Subsidy) policy,
which aimed to promote more phosphorus and potassium-based fertilisers, the ratio
of Nitrogen:Phosphorus: Potassium (NPK) was 10.9:4.4:1, compared to a consensus
that this ratio should be 4:2:1 (The Fertiliser Association of India, 2024).
d. Low investment in research and development (R&D): R&D spending in the industry
is less than 1% of the total revenue. This hampers innovation and technological
advancement in the industry (Khan, 2017).
e. High production costs: Production costs are 8-17% higher than the conventional
method, depending on the use of urea (Kothadiya et al 2024).
Suggestions
a. Increase energy efficiency of plants: Incentivising retrofitting of older fertiliser plants
to reduce energy intensity to the level of industry best of 5.5 Gcal/t of urea (Oak,
2022), measures include installing Variable Frequency Drives (VFDs) on pumps and
motors, and replacing ageing pumps and compressors. A good example is that
of Iran, where older compressor rotors were replaced with high-solidity diffusers,
boosting efficiency from 67% to 74%. Similarly, the fertiliser plant’s refrigeration
cycle was retrofitted by application of a Pinch heat, reducing shaft work by 15%
(Panjeshahi, 2008).
b. Reduce fertiliser imports: The Indian government has already undertaken many new
initiatives to reduce reliance on fertiliser imports. In 2023, the government classified
potash and potassic minerals like glauconite as critical (PIB, 2023). This move will
bring in private investment through the Mines and Minerals Act. This year, the first
mining block of potash and halite was auctioned in India in Rajasthan. Further
research is ongoing on alternative sources for NPK that are available domestically
and can be utilised (Ministry of Chemicals and Fertilisers, 2022). One of these is
Potash Derived from Molasses (PDM), which is a byproduct of the sugar industry
that has been included in the NBS policy since 2022. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 98
Industry Sector Modelling and Results
3.2.9 Refineries
Demand Projections
In India, petroleum products are primarily used in the transport sector, followed by industry,
cooking (residential and commercial), agriculture, and power. Transport fuels like diesel and
petrol dominate consumption; these two products together account for around 43% of total
petroleum product demand.
The model estimates future refinery capacity demand by aggregating projected requirements
across sectors under different scenarios. These scenarios are shaped by the specific transition
pathways of each sector: shifts to alternative fuels/technologies, efficiency improvements,
material re-cycling and policy-driven low-carbon transition. This results in comprehensive
projections for conservative as well as ambitious energy transition contexts. Refinery capacities
are calculated based on the ratio of crude oil to petroleum products. The total petroleum
demand reaches around 400 Mt in 2050 and 345 Mt in 2070 under Current Policy Scenario
(CPS) and 290 Mt in 2050 and 150 Mt in 2070 under Net Zero Scenario (NZS) (57% lower than
CPS in 2070). Therefore, the crude oil processed will also be lower in NZS as compared to CPS.
Scenario Assumptions
Two scenarios are examined for the Refinery sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), with differences explained in the table below:
Table 3.9: Scenario assumptions for refineries sector
Current Policy ScenarioNet Zero Scenario
Green HydrogenMajor driver for Green H
2
with
penetration reaching 70% by
2070.
Major driver for Green H
2
with
penetration reaching 100% by
2070.
Electricity Supply Captive generation continues to
provide around 90% of electricity
consumption in 2070 (same as in
2025).
Further, within captive, from
dominantly fossil in 2025, there
will be gradual shift towards non-
fossil whose share increases to
30% by 2070.
Dependence on captive
generation decreases to 70% of
total electricity consumption in
2070 (Reduced from 90%).
The entire captive power will
be non-fossil-based electricity
system by 2070.
Results:
Total final energy consumption in the refinery sector would increase steadily in the near to
medium term, driven by rising crude throughput and increasing refining depth. Until mid-century,
energy demand would be dominated by natural gas and petroleum products, supplemented
by grid electricity and refinery-derived fuels such as syngas and purge gas. By mid-century,
however, significant uptake of green hydrogen would cause a noticeable reduction in the use of
natural gas as feedstock for grey hydrogen. A greater shift towards grid-based electricity and
progressive low-carbon transition of captive power generation through RE integration would
result in a gradual transformation of the refinery energy mix (Figure 3.31). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 99
Industry Sector Modelling and Results
Final Energy Consumption in Refinery Sector (Mtoe)
45
40
35
30
25
20
15
10
5
0
2020202520502070
CPSNZSCPSNZS
Grid ElectricityGH
2
Natural Gas Petroleum Products Syn Gas/Purge GasCoalRE
Figure 3.31: Final energy consumption in refinery (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Under the Current Policy Scenario (CPS), despite the growing role of green hydrogen by mid-
century, the sector would rely substantially on fossil fuels for thermal energy and captive power.
With the increasing demand for petroleum products (rising by 1.6 times in 2050 from 2025
value), total final energy consumption would rise from around 30.5 Mtoe in 2025 to approximately
39 Mtoe by 2050. Beyond 2050, energy demand would decrease slightly (due to a decrease
in petroleum product demand from end-use sectors) to about 34 Mtoe by 2070. It should be
noted that energy demand estimates do not include the renewable electricity required for green
hydrogen production, which lies outside the refinery’s final energy consumption boundary.
In contrast, under the Net Zero Scenario (NZS), the impact of significant mid-century green
hydrogen deployment would be more pronounced and be complemented by bigger structural
changes. Total final energy consumption would decline substantially by 2070, driven by: (i)
reduced crude oil demand as petroleum product use, particularly in the energy sectors, falls
under the Net Zero pathway, and (ii) a decisive shift in the energy mix towards electricity
and green hydrogen, with a corresponding reduction in natural gas and petroleum products.
Refinery fuel gas and syngas consumption would also decline as grey hydrogen production is
phased out. Total final energy consumption under NZS at 23 Mtoe in 2070, would be 32% lower
than that under the Current Policy Scenario (CPS).
Overall, the projection underscores that while refinery energy demand would rise under the
CPS, a Net Zero pathway supported by a significant reduction in petroleum product demand
and higher green hydrogen penetration would align the sector with long-term low-carbon
transition objectives due to moderation in energy demand and a fundamental shift in the fuel
mix away from fossil fuels. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 100
Industry Sector Modelling and Results
Emissions
In the refinery sector, nearly one-third of total emissions are generated by process-related
sources, primarily due to the use of grey hydrogen and fossil fuel combustion in catalytic
cracking units. The remaining emissions are largely attributable to fossil-fuel-based thermal
energy and captive electricity generation, which together account for the bulk of energy-related
emissions. The resulting emission intensity of the sector in 2025 is estimated at around 0.28
tCO₂ per tonne of crude oil processed (Figure 3.32).
0.300
0.250
0.200
0.150
0.100
0.050
0.000
CPSCPS NZSNZS
2070205020252020
Figure 3.32: Emission intensity of refinery sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Despite the implementation of low-carbon transition measures such as energy-efficiency
improvements, fuel-switching and green hydrogen penetration defined under the Current
Policy Scenario (CPS) trajectory, the refinery sector continues to retain a significant emissions
footprint. Under the CPS, emission intensity would decline modestly by about 26%, reaching
approximately 0.20 tCO₂ per tonne, reflecting the limited abatement potential for process
emissions and the continued reliance on fossil fuels. In contrast, deeper low-carbon transition
measures deployed under the Net Zero Scenario (NZS), including use of renewable energy,
cleaner fuels, and large-scale penetration of green hydrogen, would reduce emission intensity
to around 0.145 tCO₂ per tonne of crude oil processed in 2070, corresponding to an overall
reduction of approximately 47% relative to 2025 levels. For unabated emissions, adoption of
carbon capture, utilisation, and storage (CCUS) would be crucial. CCUS will play a critical role
with captured CO₂ assumed to be partially utilised in enhanced oil recovery (EOR). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 101
Industry Sector Modelling and Results
Barriers and Enablers for Refinery Sector Energy Transition
Challenges
a. High CO₂ from Steam Methane Reforming (SMR) process: Hydrogen utilised for
hydrocracking and desulfurisation generates a significant amount of emissions (9
kgCO₂/kg H
2
), if produced using the Steam Methane Reforming (SMR) process (Sun
& Elgowainy, 2019).
b. Barriers to CCUS and renewable integration: Retrofitting refineries to incorporate
CCUS or RE is expensive and involves large investments. In addition, a lot of Indian
refineries operate on old infrastructure that is not suitable for CCS or RE integration.
c. Ageing equipment and limited digital controls: This results in energy intensity
above world best practices and limits the scope for optimisation in older plants.
Further, lack of predictive maintenance and advanced analytics leads to unplanned
outages, flaring and inefficiencies, thereby increasing carbon intensity.
Suggestions
a. Improving energy efficiency: Installing heat recovery systems, upgrading reactor
internals, shifting from steam to electric drivers and using advanced process controls
would help lower energy use and improve reliability.
b. Invest in modular CCUS: Modular CCUS units allow phased installation, reducing
upfront risk, shutdowns, and retrofit challenges. IOCL’s Koyali refinery reports
capture costs of USD 55–60/tCO
2
, with potential applications in oil fields, chemical
production, or carbon credits to offset investment (Sharma et al., 2025). The REALISE
CCUS programme in the EU, China, and South Korea aims to double capture rates,
cut costs by nearly a third, and lower emissions by 10 Mt a year by 2030.
c. Adopting advanced catalysts: new generations of catalysts, operating at lower
pressures and temperatures, reduce hydrogen requirement for desulfurisation,
resulting in lower energy consumption.
d. Invest in heat recovery and residual heat use: Refineries can capture and reuse waste
heat from flue gases, reducing both cost and emissions (e.g., Reliance’s Jamnagar
refinery in India). Shell’s Pernis refinery in Rotterdam began supplying residual heat
to a local network in 2018, providing heating for over 16,000 homes and reducing
CO₂ emissions by 35,000 tonnes annually (Shell 2019).
e. Diversification into low-carbon products: Refineries can co-process renewable
feedstocks in existing hydrotreaters to produce renewable diesel or sustainable
aviation fuel (SAF). In many cases, with adequate hydrogen supply, only a catalyst
change is needed in kerosene hydrotreaters, allowing up to 5% renewable blending
at relatively low cost (Chopra 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 102
Industry Sector Modelling and Results
3.3 OVERALL INDUSTRY RESULTS AND SUMMARY
India’s industry sector consumed about 302 Mtoe of energy in 2020 and 369 Mtoe in 2025
10
,
with the mix dominated by fossil fuels. In the fuel mix for 2020, coal supplied roughly 34%
of energy demand, followed by petroleum products (37%), natural gas (12%), electricity (15%),
and 1% biomass. Within this, a sizeable fraction of fuels is used as feedstock rather than for
combustion, e.g. naphtha/natural gas in chemicals and petrochemicals and natural gas in
ammonia/urea, creating process-related emission profiles distinct from those of fuel use.
Captive power contributes about 41% of total industrial electricity consumption, which is
generated predominantly from coal (around 86% of captive output). Gas and diesel constitute
about 11%, and hydro, solar and wind together account for just over 3% of captive electricity.
Overall Industry Energy Mix
2020
2020
BiomassNatural GasCoal
Petroleum ProductCaptive ElectricityGrid ElectricityRECoal Gas & Diesel
1%
34%
12%
37%
10%
6%
85%
12%
3%
Figure 3.33: Overall industrial energy supply mix and fuel type for captive electricity, 2020
Energy Demand Projections
Final energy demand. In Current Policy Scenario (CPS), final energy demand increases from
370 Mtoe in 2025 to 980 Mtoe in 2050 and 1150 Mtoe by 2070. Fossil share of final energy
moderately declines from 83% in 2025 to 72% by 2050 and 61% by 2070, with corresponding
increase shifting towards electricity whose share rises from 16% in 2025 to 24% by 2050 and
29% by 2070. Coal continues to play a dominant role till 2050, whose share in final energy
increases from 39% in 2025 to 45% by 2050 before declining to 35% by 2070. Biomass plays
a limited role in CPS, with a modest increase from 1% in 2025 to 5% by 2070 in final energy.
In Net Zero Scenario (NZS), on the other hand, final energy increases to 890 Mtoe by 2050
(~10% lower compared to CPS) and 980 Mtoe by 2070 (15% lower compared to CPS). The share
of fossil declines 52% by 2050 and 26% by 2070 from a predominantly fossil system in 2070.
Coal share drops to 7% by 2070, with majority of coal-use operating with Carbon Capture in
NZS. Electrification continues to play a major role, with share increasing to 37% by 2050 and
10 This includes fuels for non-energy uses, as well as consumption categorised under the “non-specified” category and
statistical differences in the MoSPI energy balance, which are assumed to be captured within the “Other Industries”
category, after accounting for transport sector allocations. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 103
Industry Sector Modelling and Results
55% by 2070. In practice, this entails deep electrification of low and medium temperature heat,
a switch to H₂-based routes for very high temperature and process needs (for example DRI-EAF
steel, green ammonia and methanol), and a transition of captive power from fossil units to grid
and captive renewable supply. Also, in comparison to Current Policy Scenario (CPS), biomass
share also increases to 9% by 2070. Green hydrogen scales from zero today to 50 Mtoe (about
6% of industrial energy) by 2050 and 100 Mtoe (around 10%) by 2070 (See Figure 3.34 and
Table 3.10).
Biomass Coal Natural Gas Petroleum Product Electricity Green Hydrogen
Final Energy Consumption
1400
1200
1000
800
600
400
200
0
CPSCPS
20502020 20252070
NZSNZS
Mtoe
Figure 3.34: Projections of demand (Mtoe) under Current Policy Scenario (CPS) and Net
Zero Scenario (NZS)
Table 3.10: Projections of demand breakup under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS)
2020 2025
20502070
Current
Policy
Scenario
Net Zero
Scenario
Current
Policy
Scenario
Net Zero
Scenario
Biomass1% 1% 3% 5% 5% 9%
Coal 34% 39% 45% 26% 35% 7%
Natural Gas 12% 12% 8% 10% 8% 8%
Petroleum
Product
37% 32% 18% 17% 17% 11%
Electricity 15% 16% 24% 37% 29% 55%
GH
2
0% 0% 2% 6% 5% 10%
Total Energy
Demand (Mtoe)
302 370 980 890 1150 980
Fuel for Captive
Electricity
34% Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 104
Industry Sector Modelling and Results
Pillars of Net Zero Transition
India’s industrial pathways to Net Zero rests on a portfolio of measures. This section discusses
key levers critical for hard-to-abate sectors, including green hydrogen, circular economy, and
carbon capture technologies. Sector-specific interventions and potential levers are discussed in
detail within each respective sub-sectors.
Green Hydrogen
Hydrogen is the critical decarbonisation vector for hard-to-electrify industrial processes
providing a clean reducing agent for ironmaking and a zero-carbon feedstock for ammonia,
and refinery uses. From a near-zero green baseline in 2025 (hydrogen use is predominantly
grey, concentrated in refineries and fertilisers), the two scenarios project sharply divergent
trajectories.
45
40
35
30
25
20
15
10
5
0
CPSCPSCPSNZS
203020502070
NZSNZS
Steel Refinery Fertiliser Export
Million Tonnes
Figure 3.35: Green hydrogen projection in CPS and NZS (million tonnes) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS)
Under the Current Policy Scenario (CPS), green hydrogen would grow mainly as an adjunct
to fossil routes: demand reaches 8.4 Mt in 2050, and 24 Mt in 2070. The sectoral pattern
shifts gradually toward steel, about 2.0 Mt in 2050 and 13.3 Mt in 2070, with the remainder
of 2070 splitting between exports (5 Mt), fertilisers (3.5 Mt), and refineries (2 Mt). In Net
Zero Scenario (NZS), green hydrogen becomes a pillar of industry. Demand rises to 22 Mt
in 2050, and 42 Mt in 2070, almost double that under CPS. Steel would be the anchor load
(13.0 Mt in 2050 and 28.2 Mt in 2070) as hydrogen-DRI/EAF replaces coking-coal routes,
fertilisers shift decisively to green hydrogen as feedstock (4.5 Mt), refineries green their
process hydrogen even as crude throughput moderates (2.3 Mt), and an export platform in
ammonia/synthetic fuels underpins scale (7 Mt) (Figure 3.35).
This has material consequences on power. At around 55 MWh of electricity required per tonne
of hydrogen, CPS requires about 470 TWh (2050) and 1330 TWh (2070) for electrolysis, while Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 105
Industry Sector Modelling and Results
Net Zero Scenario (NZS) requires 1,210 TWh (2050) and 2,310 TWh (2070). Green hydrogen
thus ties the industrial transition directly to clean-power expansion and long-term power-market
reforms (open access, long-tenor PPAs, balancing and storage).
Circular Economy
India starts from a base that is dominated by primary materials— for example, cement remains
clinker-intensive, and steel relies heavily on ores and fulfils scrap supply shortfalls through
imports (India was the world’s second largest ferrous-scrap importer in 2023, bringing in 11.76
Mt, up 40% year on year (S&P Global, 2024).
Circular economy strategies decouple growth from raw-material use by maximising reuse,
recycling, and material recovery. Under the Current Policy Scenario (CPS), measures like
extended producer responsibility (EPR), end-of-life vehicle (ELV) rules, and improved recycling
deliver notable gains. The Net Zero Scenario (NZS) delivers deeper interventions across key
sectors. In steel, scrap utilisation is estimated to rise from 22% at present to 30% by 2050
and 40% by 2070, reducing reliance on energy-intensive ore-based smelting. Recycling would
become a prominent source of aluminium and use just 5% of the energy required for primary
production. In cement, lower clinker ratios (0.6 (CPS) and 0.55 (NZS)) and the adoption of
blended cements with recycled aggregates. At an output of 1,958 Mt in 2070, nearly 100 Mt of
clinker would be avoided annually through higher use of SCM (slag, calcined clay, pozzolans,
limestone). (Figure 3.36)Share of Scrap- Steel Share of Scrap- Aluminium Clinker to Cement Ratio
50%
40%
30%
20%
10%
0%
50%
40%
30%
20%
10%
0%
0.8
0.6
0.4
0.2
0
2020
22%
2020
27%
2020
0.67
2050
30%
2050
36%
2050
0.62
2070
40%
2070
40%
2070
0.55
Figure 3.36: Net Zero Scenario - share of scrap in steel and aluminium, and clinker to
cement ratio in cement production projections
Carbon Capture
Even after efficiency improvement, electrification, circularity, and green hydrogen, India’s
industry retains a large “hard” core of process CO₂ (This is from cement calcination, steel off-
gases, aluminium anode) and residual fuel/feedstock emissions (Figure 3.37). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 106
Industry Sector Modelling and Results
1400
1200
1000
800
600
400
200
0
Aluminium
93
317 09
42
56
745
104 1365
Other
Industries
Chlor-alkaliRefinery Ethylene Cement Steel Residual
Emissions
GHH Emissions (Million Tonnes)
Figure 3.37: Break-up of residual emissions (MtCO
2
)
Under the Current Policy Scenario (CPS), no CCUS is installed, so these emissions remain
unabated. In the NZS, capture scales as the last-mile lever: rising from pilot volumes in the
2030s to around 100 MtCO₂/yr in 2050, then expanding with CO₂ hubs, pipelines, and saline
storage to roughly 1,000 MtCO₂/yr in 2070, covering essentially all point-source-amenable
residuals.
Investment Requirement
India’s industrial low-carbon transition will demand huge capital to finance the shift from
conventional fossil assets to large-scale deployment of electrification, hydrogen, and carbon
capture systems, which are capital-intensive. Financing clearly needs to prioritise efforts towards
electrification, efficiency and first-of-a-kind hydrogen projects till 2060, while the post-2050
period is dominated by carbon capture and the build-out of hydrogen and CO₂ networks. By
2070, under the Net Zero Scenario, the industry sector alone will require cumulative investments
of around USD 6.1 trillion, of which roughly USD 2.2 trillion is needed before 2050 and another
USD 3.9 trillion after 2050 (Figure 3.38). The investment profile is back-loaded, with nearly
two-thirds occurring after mid-century as carbon capture and hydrogen infrastructure expand.
Investment Requirement- USD Trillion
2025-2050
2050-2070
0 0.51.53412.523.54.5 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 107
Industry Sector Modelling and Results
Figure 3.38: Total investment requirement (USD Trillion)
Investment Requirement in NZS
USD Trillion
0.002.005.001.004.003.006.00 7.00
Industry CAPEX
Captive- Non-Fossil
Captive- Thermal
Carbon Capture
Green Hydrogen- Electrolyser
RE for GreenH
2
Figure 3.39: Technology-wise Investment requirement in NZS (USD Trillion)
Green Hydrogen and its Renewable Backbone (36%): About USD 1.2 trillion in
electrolysers and USD 1.1 trillion in dedicated renewables, front-loaded through the
2030s–40s and then accelerating post-2050 as hydrogen becomes a mainstream
fuel and feedstock.
Captive Electricity (13%): investments would be made mainly before 2050 as firms
hedge reliability and cost while moving off captive coal and gas (captive investments
in thermal USD 0.04 trillion and nuclear USD 0.02 trillion would remain marginal).
Carbon Capture Technologies (21%): Minimal before 2050 but surging thereafter to
abate residual process CO₂ in cement, steel, and chemicals.
CAPEX for Industry Expansion (30%): The remainder investments would finance
core plant transformation: steel (12%) from BF-BOF toward H₂-DRI/EAF supported
by scrap-EAF, cement (5%) for kiln efficiency, waste-heat recovery, and lower-
clinker routes, with capture equipment counted under CCUS, chemicals (7%) toward
gas- and then hydrogen-integrated feedstocks with CCUS on residual fossil routes.
Another USD 0.30 trillion is distributed across aluminium, paper, textiles, fertilisers,
chlor-alkali, and refining for capacity expansion (Figure 3.39).
In comparison, Current Policy Scenario (CPS) finance requirements are nearly half those under Net
Zero Scenario (NZS), at USD 3.4 trillion by 2070. Under CPS, investment primarily meets incremental
demand growth, with around 55% of total finance going to CAPEX by 2070, compared to about
30% under NZS. NZS, by contrast, will require a more ambitious investment strategy focused on a
complete transformation of the industry sector through accelerated deployment of GH
2
, RE RTC,
advanced captive nuclear, and CCS.
Limitations and Future Scope
Sectoral Coverage: The current framework disaggregates industries into nine PAT (Perform,
Achieve, and Trade) sectors and a residual “Other Industries” sub-sector. While the nine PAT
industries are modelled in detail, covering specific technologies, their specific energy consumption
(SEC), fuel mixes, and investments, the “Other Industries” category lacks technology-specific Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 108
Industry Sector Modelling and Results
data. For the estimated energy consumption in the other industries category crude methodology
is adopted. For the base year, the fuel mix in “Other Industries” is estimated based on residual fuel
allocated after accounting for other sectors, from which energy consumption per unit of Other
Industries Gross Value Added (GVA) is derived. For future projections, total fuel consumption
for this sub-sector is estimated using projected GVA, while accounting for energy efficiency
improvements and fuel switching toward cleaner fuels and electricity.
Technology Cost Trends: Cost trends for emerging technologies such as green hydrogen
electrolysers, CCUS (Carbon Capture, Utilisation, and Storage), and LC3 cement are derived
based on current best knowledge and stakeholder consultations. However, these estimates may
vary significantly in the future as markets evolve and economies shift due to factors like scale-
up effects, policy incentives, and supply chain maturation. Industry sector modelling thus faces
limitations in projecting long-term investment needs accurately.
Investment Required for Energy Efficiency Measures: In this study, detailed energy efficiency
improvements in a specific sector, identified via industry stakeholder consultations, are
accounted for to estimate future Specific Energy Consumption (SEC). However, the related
capital investments required for these measures are not explicitly modelled.
Stranded Assets Non-Accountability: With the transition in industry sectors, particularly under
Net Zero scenarios, certain assets may become stranded, including their capacity and associated
costs. This study does not account for such stranded assets or their economic implications.
Exclusion of Non-Fuel Raw Materials: This analysis accounts exclusively for fuel inputs in
terms of energy consumption and non-energy applications in different industries. Non-fuel raw
materials, such as iron ore for steel production, bauxite/alumina for aluminium smelting, and
limestone for cement clinker, are excluded from the modelling framework. Consequently, their
supply chain constraints, resource availability, procurement costs, and price volatility are not
incorporated into capacity expansion, cost projections, or scenario pathways.
Aggregation of Sunrise Industries in Other Industries Category: Sunrise industries, such as solar
cell manufacturing, wind turbine production, and electrolyser fabrication, will exhibit significant
energy consumption as domestic manufacturing scales up in India. These sectors are captured
within the aggregate “Other Industries” category, with demand projections derived from GVA
growth excluding PAT sectors. However, their distinct technology profiles, rapid capacity
expansions, and specialised energy intensity characteristics are not explicitly disaggregated or
modelled separately from the broader category.
Uniform Capacity Utilisation Assumptions: This study assumes a constant 80% Plant Load
Factor (PLF) across all industrial capacities to estimate investment requirements. In reality,
PLF varies significantly across industry categories, technologies, and historical periods due to
demand fluctuations, policy interventions, and operational efficiencies. This uniform assumption
introduces uncertainty in capacity expansion projections and associated capital expenditure
estimates.
Scrap Availability and Supply Constraints: For scrap utilisation scenarios, this analysis assumes
full availability of required scrap inputs without supply-side constraints. Detailed modelling of
scrap generation, collection logistics, quality specifications, import dependencies, or domestic Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 109
Industry Sector Modelling and Results
recycling capacity expansions has not been conducted.
Exclusion of Non-CO
2
and PFC Gas Abatement: This analysis does not model abatement
measures for non-CO
2
greenhouse gases or perfluorocarbons (PFCs) emitted by industrial
processes. Consequently, their mitigation potentials, technology costs, and emission reduction
contributions are excluded from Net Zero scenario projections.
Future Model Improvements
Future iterations of the industry sector modelling framework will address these limitations
through enhanced data granularity and dynamic methodologies. Key enhancements include
disaggregating “Other Industries” into technology-specific sub-sectors (including sunrise
industries), incorporating non-fuel raw material supply chains and scrap recycling dynamics,
explicitly modelling energy efficiency capital requirements alongside abatement costs for
non-CO
2
/PFC gases, and integrating stranded asset risk assessments under varying Net Zero
transition pathways. These improvements would enable more robust investment projections,
reduce uncertainty in cost trajectories for emerging technologies, and better align with India’s
comprehensive energy transition and Viksit Bharat objectives.
. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 110
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Industry Sector Modelling and Results
4
CHALLENGES AND
SUGGESTIONS Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 112
4
Challenges and
Suggestions
India stands at a defining moment where it aspires to become a developed economy while also
ensuring that the transition to developed status is through sustainable means. As the engine
of the ‘Viksit Bharat 2047’ vision, the industrial sector drives economic resilience, infrastructure
growth, and employment and yet, it remains the hard-to-abate component of the Net Zero
journey, accounting for ~24% of national emissions in 2020 (MoEFCC, 2024). Decoupling
industrial growth from carbon intensity is no longer a choice but a competitive necessity.
This transition rests on four structural pillars: Energy Efficiency, Circularity, Electrification, and
Clean Fuels & Technologies, supported by an enabling ecosystem of finance and skilled labour.
The following chapter discusses key challenges within these pillars and outlines measures for
enabling low-carbon transition in industrial sectors.
4.1 IMPROVING ENERGY EFFICIENCY
Around two-thirds of global energy is wasted (World Bank 2025). Therefore, energy efficiency is
fundamental to low-carbon transition and the IEA labels it the “first fuel” (IEA, 2024). However,
global energy efficiency improved by just 1% in 2024 (Guy et al. 2025). India has 5.93 crore
registered MSMEs, while they contribute substantially to value addition and employment, many
use outdated, inefficient technologies and processes (PIB 2025). Even a modest 1.3% annual
improvement could avoid nearly 4,606 million tonnes of CO₂e emissions between 2020 and
2050 (Dayal et al. 2025). Recognising the benefits of energy efficiency, India launched its
Perform, Achieve and Trade (PAT) scheme in 2012. Its market-based energy efficiency approach,
covering 1,333 designated entities across 13 energy-intensive sectors, has enabled savings of
nearly 8% in the annual energy use of these sectors (Ministry of Power 2024). Yet, Indian
industries today face multiple challenges in improving energy efficiency. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 113
Challenges and Suggestions
Table 4.1: Challenges and suggestions for improving energy efficiency
Key Barriers Intervention/ Suggestion
Energy
Performance
Monitoring
Weak performance monitoring
Lack of real-time monitoring leads
to reactive maintenance (Bansal &
Tilottma, 2024). The 3-year audit
cycle under PAT (BEE 2014) is too
infrequent to optimise performance.
Lack of Benchmarks:
Absence of uniform benchmarks for
complex thermal processes across
diverse sectors.
Facilitate continuous performance
monitoring.
Shift from infrequent audits to continuous
digital verification, leveraging IoT and AI
tools and standardising the monitoring by
adopting ISO 50001 standards.
Strengthen the Indian energy efficiency
portal of BEE to include global and India
benchmarking data sector-wise.
Financing and
Technology
Modernisation
Limited access to affordable
finance
MSMEs (e.g., textile, foundry
clusters) operate on thin margins
and lack capital for upgrades
despite 1–5-year payback on many
of these technologies.
Lending costs are also high for
MSMEs due to weak balance sheets
and reliance on informal credit.
Prevalence of outdated
technologies
Prevalence of obsolete technologies
like inefficient motors and small
coal-fired boilers due to limited
access to finance and a lack of
awareness
Significantly high-grade heat
(Steel/Cement) and low-grade
heat (Textile/Paper) are vented
out instead of being recovered or
reused. Process heating <150°C
relies heavily on fossil fuels.
Effective implementation and scaling
of the newly launched ADEETIE
scheme (Assistance in Deploying Energy
Efficient Technologies in Industries &
Establishments) through interest subvention
and end-to-end project management
support, addressing financial and awareness
bottlenecks
Reducing the burden on MSME balance
sheets through ESCO models roll-out
Scale the ESCO model where it invests in
the upgrade (e.g., swapping old motors
for IE3/IE4 standard motors) and recovers
costs from shared energy savings.
Considering Waste Heat Recovery as RE
for the purpose of Renewable Consumption
Obligations (RCOs)
Promote adoption of Heat Pumps for
catering to low-heat applications through
VGF mechanisms till the Total Cost of
Ownership viability is achieved.
4.2 BUILDING CIRCULARITY IN MANUFACTURING
The strong reliance on virgin materials is one of the key challenges of industrial decarbonisation
in India, leading to high resource depletion, carbon emissions, and significant waste generation.
For instance, in textiles, only 34% of waste is reused, and 25% is recycled into yarn, resulting
in high dependency on virgin fibres, driving emissions and resource stress (CSTEP and GIZ
2025). In the pulp and paper sector, large mills generate 168–282 m³ of wastewater per tonne
of paper, while smaller mills discharge even more at 187–338 m³ per tonne, mainly due to a
lack of efficient chemical recovery systems, which otherwise could be internally recirculated
and reused (Pathe and Nandy 2021). Similarly, each tonne of scrap in the steel industry saves
1.1 tonnes of iron ore, 630 kg of coking coal, and 55 kg of limestone (Ministry of Steel, 2024).
A circular economy is key for low-carbon transition, as closing material loops can deliver both
economic and environmental benefits, making industries competitive and more resilient in the Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 114
Challenges and Suggestions
long run. For example, in the steel sector, every tonne of scrap used reduces emissions by 58%,
cuts water consumption by 40% and generates 97% less mining waste in comparison to primary
steelmaking (G20 Secretariat India, CEEW, RMI, and WRI India 2023). With India’s growing
demand for infrastructure and real estate, increasing the share of scrap in production can ease
pressure on natural resources while reducing the carbon footprint. The economic opportunity
from circularity is equally significant. India’s circular economy is expected to be worth nearly
USD 2 trillion and create close to 10 million jobs by 2050, creating new channels for innovation,
startups, and recycled product developers (MoEFCC 2025).
Table 4.2: Challenges and suggestions for building circularity in manufacturing
Key Barriers Suggestion & Intervention
Creating
Demand for
Circularity
Low quality of recycled materials
Recycling and resource recovery
(metal scrap, wastepaper, textiles,
plastics) are largely handled
by informal actors, resulting in
variable quality, weak traceability,
and often leading to downcycling.
Informal sector bypasses safety
and other standards, making
formal recycling less competitive.
Lack of standardised grading
and certification for secondary
materials creates low market
confidence. Buyers are hesitant to
pay premiums for “eco-labelled” or
recycled-content products due to
quality risks.
Feedstock Inconsistency:
Industrial users require uniform
quality feedstock. However, mixed
waste streams and a lack of pre-
processing infrastructure lead to
inconsistent moisture and calorific
values, causing process instability.
BIS to introduce rigorous grading and quality
standards for secondary materials to create
assured demand
Notify Green Public Procurement (GPP)
norms, which will incentivise use of BIS-
labelled recycled material.
Provide additional incentives under PLI like
scheme coverage for utilizing domestically
recycled materials.
Provide one-time waiver of outstanding
liability and registration fees to informal
operators, enabling them to overcome initial
compliance barrier for integration into formal
sector.
Introduction of minimum recycled content
guidelines for key sectors
Enable traceability by promoting Digital
Product Passports, which will contain recycled
information to nudge consumer behaviour
Expand EPR to include additional high-
impact and currently under-regulated product
streams such as textiles, footwear, batteries,
etc., and strengthen monitoring for effective
implementation of EPR.
Import
Dependency
on Scrap
Limited domestic scrap
Domestic recovery remains
inadequate, forcing heavy
reliance on imported scrap (Steel,
Aluminium, Paper)
17
, exposing
industry to global price volatility
and supply shocks.
Promote domestic recycling industry through
strong demand signals and assured offtake.
Rationalise GST and import duties to favour
scrap recycling. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 115
Challenges and Suggestions
Key Barriers Suggestion & Intervention
Import
Dependency
on Scrap
Many developed countries are
restricting scrap exports for
promoting domestic low-carbon
transition e.g. EU proposed a scrap
ban on plastic and non-hazardous
waste (like metals, paper) to non-
OECD nations, starting from 2026
and 2027, respectively. Similarly,
China and Russia have imposed
export restrictions, tightening
global scrap availability.
Fiscal policy distortions
Inverted duty structures (e.g.,
higher duties on scrap imports
than finished products in some
segments) discourage domestic
recycling value addition.
Launch organised scrap auctions and index-
linked pricing to reduce volatility.
Strengthen adoption of waste pre-treatment,
and advanced sorting (shredders, zorba,
optical sorters) technologies.
Waste
Management
Logistical Fragmentation:
Supply chains for waste-to-
resource streams (biomass,
MSW, industrial by-products) are
fragmented and expensive.
Moving waste from generation
points (cities/farms) to utilisation
points (industrial hubs) often
incurs high transport costs that
outweigh the material value. This
often also results in weak industrial
symbiosis.
Multiple layers of approval
India’s current waste regulatory
framework requires multiple layers
of authorisations and approvals,
including environmental consents,
hazardous waste permits, and EPR
registrations.
Import reliance on waste
processing equipment
Huge import dependency in
manufacturing of waste processing
equipment, with limited domestic
contribution
Assure offtake through setting up of
aggregation platforms which can be private-
led, or public-private partnerships.
Provide details of collection sectors and
consumer-facing platforms on central and state
government websites, targeted advertisements
in newspapers and digital media.
Promote “waste exchange” clusters, whereby
by-products of one industry (e.g., slag, sludge,
heat) become inputs for another.
Establish decentralised pre-processing centres
(drying/shredding/baling) near waste sources
to densify materials, reduce transport costs, and
ensure consistent quality for industrial users.
Promote common sorting and pre-processing
infrastructure in MSME clusters through PPP
model.
Unified waste management license enabled
through a digital single-window system with
time-bound approvals.
National Manufacturing Mission may include
domestic manufacturing of waste processing
equipment as a priority sector.
Integrate informal workers into EPR chains via
verified IDs, training and PPE.
Develop awareness and capacity-building
programs to enable waste processing and
recycling companies to participate effectively
in voluntary carbon markets.
17 India imported nearly 11.7 million tonnes of ferrous scrap in 2023 to meet its manufacturing requirements, 40% higher
than the quantity imported in 2022 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 116
Challenges and Suggestions
4.3 ELECTRIFICATION OF INDUSTRIAL ENERGY DEMAND
Industrial electrification is emerging globally as a key lever for decarbonising manufacturing by
replacing fossil-fuel based heat and processes with electric alternatives like heat pumps, boilers,
and furnaces. In India, advancing this transition would not only cut emissions but also strengthen
global competitiveness as supply chains and markets shift toward low-carbon production. As of
2022, electrification of the industrial sector in India stood at only 16% (NITI Aayog) and needs
to rise as the economy transitions to low-carbon alternatives.
Table 4.3: Challenges and suggestions for electrification of industrial energy demand
Key Barriers Suggestion & Intervention
Ensuring
Affordable
and Reliable
Electricity
High cost of electricity
India’s power sector is highly
regulated, and unlike many
countries, India’s domestic and
agricultural electricity tariffs are
more subsidised than industrial
and commercial tariffs. This price
distortion led to low electrification
rates (currently ~16%) in Indian
industries. High demand charges
and banking limits also make
electrification challenging.
Rationalisation of power tariffs in the long-
term to reflect the true cost of electricity
and effective enforcement of Time-of-Day
tariffs.
Facilitating timely approvals for industry
seeking Green Energy Open access
Promote and scale Renewable Energy
Service Company (RESCO) models that
aggregate demand, achieve economies
of scale, and offer professional energy
management services, reducing the
operational burden on individual industries.
PM Surya Ghar-like initaitive for MSMEs:
Introduce targeted rooftop solar scheme for
MSMEs providing direct capital subsidies.
The cost of steam generated using
electricity is often higher than that
generated using coal or gas, making
electric heating uncompetitive
without policy support.
Reliability of electricity
Frequent power outages and
voltage drops make it difficult
for industries to rely solely on
grid electricity. Industries need
round-the-clock power; even short
disruptions cause high production
losses, forcing them to rely on
captive coal power plants.
While solar/wind costs have fallen,
industries cannot rely solely on
them due to intermittency and a
lack of cost-competitive storage
options. Open-access approvals
face regulatory friction, and grid
congestion constrains the reliability
of power supply in terms of on-
schedule supply certainty and cost
predictability.
Scale implementation of Firm Dispatchable
Renewable Energy (FDRE) contracts
through deployment of Hybrid plants
matching industrial load profiles.
Develop dedicated power feeders for
industrial zones which can provide assured
24×7 grid power, reducing dependence on
self-generation and encouraging industries
to shift to cleaner electricity sources. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 117
Challenges and Suggestions
Key Barriers Suggestion & Intervention
Technology
Readiness &
Financing
High upfront cost and commercially
unviable electrification technologies
While electrification is mature for
low-temperature heat (<150°C),
technologies for high-temperature
process heat (e.g., cement kilns,
ethylene crackers) are either nascent
or commercially expensive.
Transitioning from fossil-fuel boilers
to efficient electric alternatives like
Industrial Heat Pumps or Electric
Boilers requires significant capital
investment. MSMEs (e.g., in Textile
clusters) lack the financial depth to
fund this asset replacement despite
the efficiency gains.
Skill shortages
There are limited process design
standards for electric heat. Moreover,
there is a shortage of skilled
Engineering, Procurement, and
Construction (EPC) contractors and
O&M providers for electrified heat
systems (e.g., heat pumps). Factory
users perceive risks in adopting
these new technologies.
Develop sector-wide electrification
roadmap linking temperature ranges,
processes, and available electrification
technologies to guide industries in
sequencing their transition (e.g., prioritising
low-grade heat <150°C first).
Promote blended finance instruments
with assured green premiums for mature
electric technologies such as electric
boilers, where high operating costs limit
adoption despite technical and cost
competitiveness.
The National Manufacturing Mission may
include domestic manufacturing of heat
pumps and electricity boilers as a priority
sector.
4.4 DEPLOYMENT OF NEW TECHNOLOGIES AND FUELS
Globally, industrial decarbonisation is being driven by a mix of newer innovative technologies,
sustainable fuels, and materials. While green hydrogen is being explored for steel, refineries and
fertiliser industries, CCUS is emerging as a new technology to capture CO
2
from point sources
such as cement factories. Similarly, sustainable materials such as inert anode technology are
being developed to replace their conventional counterparts and reduce aluminium industry
emissions. The initial transition stages are more focused towards blending fuels, for instance,
hydrogen blending in BF-BOF steel plants to produce low-carbon steel, while the medium to
long-term looks at complete replacement of coal/gas in H
2
-DRI-EAF setups. Countries globally
are planning their long-term pathways by adopting newer technologies, fuels and materials in
the pathways, although most of them are still at a very nascent stage.
Deploying newer sustainable technologies, cleaner fuels, and materials can be challenging.
High upfront costs and green premiums reduce competitiveness compared to conventional
counterparts. Simultaneously, a lack of standardisation, fragmented policies, and regulatory
uncertainties hinder investment confidence and slow down adoption across industries. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 118
Challenges and Suggestions
Table 4.4: Challenges and suggestions for deployment of new technologies and fuels
Key Barriers Suggestion & Intervention
Technology
Maturity &
High Costs
High risks with new technologies/
fuels
Decarbonisation of hard-to-abate
sectors relies on technologies like
Hydrogen-DRI (Steel), Electric
Crackers (Petchem), and Carbon
Capture (Cement) that are still
in pilot or early commercial
stages. Private sector hesitates to
invest in “First-of-a-Kind” (FOAK)
commercial-scale projects due
to technical risks and uncertain
returns.
Green alternatives have high upfront
costs with uncertain returns (e.g.,
decarbonising steel and cement
requires hundreds of billions USD).
The “Green Premium” (cost
difference between clean and fossil
tech) is high, discouraging early
adoption.
Green and low-carbon suppliers,
particularly MSMEs in sectors
such as waste processing,
recycling, renewable energy, and
energy-efficient technologies
face high working capital
constraints due to delayed
payments and limited access to
affordable short-term finance.
No widely adopted product carbon
labels or taxonomy makes it hard to
distinguish “low-carbon” products.
Implement Pilot Projects: Government along
with Multilateral Development Banks (MDBs)
to support pilot projects in GH
2
-DRI, inert
anodes (aluminium), and CCUS-equipped
cement plants to demonstrate feasibility and
reduce investor risk.
Provide Viability Gap Funding and deploy
blended finance for technologies which
have high upfront costs and risks such as
GH
2
-DRI, CCUS.
Introduce green bill discounting through
TReDS by enabling identification and
preferential financing of invoices associated
with verified green and low-carbon goods
and services. This can be supported through
lower discount rates, priority bidding
windows, or partial risk-sharing mechanisms
for eligible invoices.
Ensure assured offtake through creation of
buyer’s platform for low-carbon products
such as Sustainable Aviation Buyers Alliance,
the Zero Emissions Maritime Buyers Alliance
and the Sustainable Steel Buyers Platform.
These platforms can also leverage Article
6.2/Article 6.4 for enabling trade in low-
carbon products.
Strengthen climate taxonomies to explicitly
include all low-carbon process routes/
technologies, with clear benchmarks, and
thresholds. Harmonise definitions and
reporting boundaries with major international
frameworks to reduce transaction costs and
uncertainty for investors.
Standardisation initiatives: Government and
industry bodies to roll out Type III eco-labels
and rating systems for key materials. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 119
Challenges and Suggestions
Key Barriers Suggestion & Intervention
Domestic
Manufacturing
and R&D
Ecosystem
Import Dependence: India currently
imports key equipment like
high-efficiency electrolysers and
advanced membrane technologies.
Lack of domestic manufacturing
keeps costs high.
R&D Ecosystem: Many critical
industrial technologies for Net Zero
(e.g. advanced green hydrogen-
based processes, CCUS, Small
Modular Reactors (SMRs), inert
anodes, novel binders) are still at
early development or demonstration
stages and require sustained R&D
support. Weak industry-academia
linkages and limited coordinated
research programmes slow progress
on addressing key technology
bottlenecks.
Localisation via PLI: Scale up Production
Linked Incentive (PLI) schemes to cover the
full value chain of clean technologies.
Dedicated industrial R&D missions and
centres of excellence focused on low-
carbon process routes, backed by public
grants and matched industry funding. The
missions may encourage joint ventures
between domestic firms, global technology
providers and research institutions so that
capital, IP and implementation capabilities
are pooled for piloting, scaling and
commercialising of low-carbon technologies.
Raw Materials
Availability
Resource Constraints (Cement):
Adoption of LC3 (Limestone
Calcined Clay Cement) is slowed
by the poor availability and variable
quality of kaolinitic clay.
Alternative Fuels: Industrial players
struggle to source consistent quality
municipal solid waste and biomass
for co-firing, limiting thermal
substitution rates.
Critical Mineral Supply: Domestic
manufacturing of electrolysers
and advanced batteries depends
on imported critical minerals (e.g.,
Nickel, Lithium, Cobalt, Platinum
Group Metals). Global supply
concentration and price volatility
pose a risk to indigenisation targets.
Supply Chain Development: Identify and
create calcined clay clusters to secure raw
material supply.
Secured Bio-Supply Chains: Strengthen the
supply chain for biomass pellets/briquettes
through aggregator incentives and storage
infrastructure to ensure year-round
availability.
Strategic Sourcing: Secure long-term
international offtake agreements for critical
minerals while accelerating domestic
exploration and recycling (urban mining) to
support local manufacturing of clean-tech
components.
For further details, Working Group report on
Critical Minerals (Vol. 10) can be referred..
4.5 JOBS AND TRADE-ENABLERS OF TRANSITION
For the industrial transition to succeed, technical interventions must be supported by an enabling
ecosystem. The scale of investment required is immense, beyond capital; the transition hinges
on a skilled workforce capable of operating new green technologies and a trade strategy that
protects India’s export competitiveness against emerging carbon border taxes. For a detailed
assessment of financing needs and social implications of transition, respective Working Group
reports (Vol. 9 & Vol. 11) can be referred.
18 In cement, ~50% of workers don’t feel ready for digital/ low-carbon tech, >50% lack basic digital literacy, while similar
gaps exist in aluminium, paper sectors. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 120
Challenges and Suggestions
Table 4.5: Challenges and suggestions for managing jobs and trade
Key Barriers Suggestion & Intervention
Employment
Risks and
Opportunities
Workforce skill gap – Fast
adoption of new technologies
risks a shortage of 30–32
million skilled workers by 2025,
rising to nearly 49 million by
2027 (Bhattacharyya & Philip
2024). There’s also a lack of
“skills intelligence” systems to
anticipate future skill needs
from new technologies, leaving
training programs reactive and
workers underprepared (ILO,
2024). Many current workers,
especially in traditional industries,
have low digital and technical
skills, creating a “transition gap”
where new energy-efficient and
low- carbon processes can’t be
adopted readily.
18
Low-carbon transition will phase
out certain carbon-intensive jobs,
risking unemployment in affected
regions if not managed.
Upskill & reskill at scale:
Sector Skill Councils (SSCs) should
institutionalise continuous collaboration with
industry partners and ITIs to ensure that
training curricula and occupational standards
are regularly updated in line with evolving
skill requirements. Certification systems
must be strengthened through employer-led
assessments and periodic third-party audits
so that SSC credentials gain stronger labour
market credibility and wage signalling value.
Greater emphasis must be placed on on-the-
job training and practice-oriented courses to
upskill the existing workforce, particularly in
emerging technologies and new production
processes.
Sector-specific transition skill roadmaps can
identify at-risk occupations and facilitate
reskilling into low-carbon roles, enabling
firms and workers to adapt smoothly to low-
carbon transition pressures.
A national skills intelligence system should
be developed to generate forward-looking
labour market information and forecast
future skill demand at sectoral and regional
levels.
Develop a national policy framework for
worker retraining, relocation support, and
economic diversification in districts affected
by industrial decline. Dedicated funding
mechanisms, including the District Mineral
Foundation for mining regions, can be
leveraged alongside coordinated efforts
by the Skill India Mission and the SCGJ to
transition workers from declining industries
into emerging green sectors.
International
Competitiveness
amid Emerging
Trade Barriers
Carbon border taxes: Indian
steel and aluminium exports face
heightened risk due to the EU’s
CBAM, which comes into effect
in 2026, as India ranks among
the most exposed countries
globally in terms of carbon cost
per dollar of EU trade.
Accelerate low-carbon transition in
export-oriented sectors to upgrade
competitiveness. Leverage domestic
carbon pricing and Article 6.2/6.4 of Paris
Agreement to enable the use of low-carbon
technologies/fuels. Key Barriers Suggestion & Intervention
High import duties on inputs
- Protective tariffs on certain
inputs make downstream Indian
industries less competitive
globally than their peers. For
example, a 30% antidumping
duty on imported bare Printed
Circuit Boards (PCBs) raises
costs for Indian electronics
manufacturers, whereas
competitors in countries like
Vietnam or Bangladesh import
them cheaply.
Lack of green export branding:
Indian products’ sustainability
advantages are not formally
recognised, while global markets
increasingly demand certified
eco-friendly products. Other
markets have initiated programs
towards a global edge in exports
using such labels (e.g., China’s
100 products program).
Evidence-based tariff policy: Institutionalise
a periodic “tariff stocktake” to assess
impact on domestic manufacturing. Recent
example: the 2025 Union Budget removed
a 2.5% import duty on certain PCB subparts
to aid local electronics assembly. Expand
such measures by also revisiting high
duties like the 30% on bare PCBs. Creating
a consultative mechanism with industry
stakeholders can guide tariff adjustments
to improve export competitiveness while
fostering domestic capabilities.
Launch a “Green Stamp” initiative
for exports to certify and showcase
the environmental footprint of Indian
products. Develop standardised assessment
frameworks (analogous to the EU’s PEFCR
guidelines) for priority export sectors, create
credible lifecycle assessment (LCA) data
repositories, and implement digital product
passports that track product sustainability
attributes.
With a recognised Green Stamp label, Indian
products can stand out in global markets for
their low-carbon and sustainable qualities,
converting India’s sustainability edge into a
competitive advantage.
Conclusion
Industrial decarbonisation in India represents both a critical challenge and an immense
opportunity. As one of the fastest-growing economies, India’s industrial sector is central to
its development but also accounts for a significant share of energy use and greenhouse gas
emissions. Moving towards low-carbon pathways will require a mix of technology upgrades,
electrification, adoption of renewable energy, resource efficiency, and innovative financing
mechanisms. At the same time, supportive policies, stronger institutional frameworks, and
capacity-building across industries, particularly in energy-intensive and MSME segments will
be essential. Achieving this transformation can position India as a global leader in sustainable
industrialisation, driving competitiveness, creating green jobs, and ensuring that economic
growth aligns with Net Zero commitments. 1 ANNEXURES Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 124
Annexure - I:
Macroeconomic
Projections
2020202520502075
Population (millions) 1347141115961621
2025-20502050-2070
Real GDP Growth Rate7% (average)3.6% (average)
Table I.1: Macroeconomic projections Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 125
Annexure - II: Emission
Factors for Industrial
Processes and Product Use
IndustryEmission Factor
Cement0.5292 tCO
2
/tonne Clinker Produced
Aluminium
Prebaked Technology: 1.6 tCO
2
/tonne,
1.45 kgCF
4
/tonne,
0.44 kgC
2
F
6
/tonne of aluminium produced
Soda Ash0.323 tCO
2
/tonne Soda Ash
Ethylene
Naphtha Route: 1.73 tCO
2
/tonne Ethylene Produced
Ethane Route: 0.76 tCO
2
/tonne Ethylene Produced
Table II.1: Emission factors for I ndustrial Processes and P roduct Use (IPPU) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 126
Annexure - III:
Grid Emission Factors
(kgCO
2
/kWh)
2020 2025
20502070
CPS NZS CPS NZS
0.713 0.710 0.328 0.257 0.067 0.000
Table III.1: Grid emission factors (kgCO
2
/kWh) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 127
Annexure - IV:
Cement Composition
Table: % Mix of Raw
Materials
ClinkerGypsum Limestone Fly ash Slag Calcined clay
Ordinary Portland
Cement (OPC)
90% 5% 5% 0% 0% 0%
Portland Pozzolana
Cement (PPC)
60% 5% 0% 35% 0% 0%
Portland Slag
Cement (PSC)
25% 5% 0% 0% 70% 0%
Portland Composite
Cement (PCC)
25% 5% 0% 35% 30% 0%
Limestone Calcined
Clay Cement (LC3)
50% 5% 15% 0% 0% 30%
Table IV.1: Cement composition: % mix of r aw materials Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 128
Annexure - V:
Fertiliser Production
Projection Methodology
Fertiliser use is derived from food grains requirement, which are estimated based on population
growth projections. Then, fertiliser nutrients demand for estimated food grains production is
calculated.
Demand for fertiliser nutrients has been estimated based on the following approach:
f. Estimation of requirement of food grains for the projected population
g. Applying response ratio of fertiliser to food grains to arrive at fertiliser demand for
food grains. This ratio is assumed to improve from 1:5.4 in 2023-24 to 1:10 by 2070,
reflecting more efficient fertiliser use through balanced application and integrated
nutrient management practices.
h. Estimation of total demand of fertiliser nutrients by taking into account the share of
other crops in total fertiliser use.
i. Estimates of demand for individual fertiliser nutrients by taking nutrient use ratio in to
account. Fertiliser nutrient use ratio is assumed to improve gradually from 10.9:4.4:1 in
2023-24 to 4:2:1 by 2047 and remain constant through 2070.
The resulting projections of demand for fertiliser nutrients from 2024-25 to 2069-70 are listed
in the table below:
Table V.1: Projected demand for f ertiliser nutrients from a ll sources (million tonnes)
YearNP
2
O
5
K
2
O Total
2023-24 (Actual)20.5 8.31.9 30.6
2049-5028.5 14.27.1 49.8
2069-7034.3 17.2 8.660.1
From these quantities, gross nutrient requirement from all sources is estimated. The actual
nutrient requirement from chemical fertilisers is projected by subtracting nutrients available
from organic sources from the total nutrient requirement.
Nutrient Realisable from Organic Sources
In recent years, the Government of India has been taking various measures to encourage use of
other sources also along with balanced fertilisation for higher agricultural productivity. Some of
these measures include 100% coating of urea with neem oil, resizing of urea bag to 45 kg from
50 kg, encouragement of the use of nano fertilisers, organic fertilisers, bio-fertilisers, potash Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 129
Annexure - V: Fertiliser Production Projection Methodology
derived from molasses, coverage of higher area under micro irrigation for use of 100% water
soluble fertilisers, promotion of city compost, etc. According to the Annual Report 2022-23 of
National Centre for Organic and Natural Farming, total production of organic fertilisers was
76.4 million tonne in 2022-23. Production of bio fertilisers in carrier form was 325.6 thousand
tonne and liquid based 557 million liters during 2022-23. In addition, during 2023-24, about
204.14 lakh bottles each of 500 mL nano urea and 44.58 lakh bottles each of 500 mL nano
DAP were sold. Further, there was sale/consumption of water-soluble fertilisers of about 220
thousand tonne in 2022-23. Gradual increase in the use of these fertilisers will supplement the
use of conventional fertilisers in the coming years, thereby improving nutrient use efficiency
for higher agricultural productivity. Based on this, gross nutrient requirement from all sources,
nutrient realisable from organic sources, if tapped fully, and actual nutrient requirement from
chemical fertilisers are projected, shown in Figure below:
Table V.2: Demand projection of f ertiliser nutrients (million tonnes)
Year Gross nutrient
requirement
Nutrient realisable from organic
sources and other products
Actual nutrient requirement
from fertilisers
2024-2531.43.527.9
2049-5049.89.440.4
2069-7060.120.939.2
Demand Projection of Major Fertiliser Products
Based on the actual fertiliser nutrient requirement, demand for major fertiliser products viz.
Urea, DAP, NP/NPKs, SSP and MOP has been worked out for the projected years. During 2023-
24, share of nitrogen through Urea to total nitrogen consumption was about 80.5%. To move
towards balance fertilisation, use of Urea would go down gradually to 75% by the end of 2036
and will continue till 2070. In case of phosphate, share of P through DAP to total P consumption
was 60% in 2023-24. It is estimated that its share will come down gradually to 55% by the
end of 2070. However, share of P through NP/NPK and SSP to total P consumption was 31%
and 8.8% in 2023-24, respectively. It is estimated that its share will move up gradually to 33%
and 12%, respectively, by the end of 2070. Similarly, in case of potash, share of K through
MOP was 52.5% in 2023-24 which would improve gradually to 55% by the end of 2070. These
assumptions have been applied to work out the product-wise demand for the projected period.
Table below shows the net demand projection of major fertiliser products such as, Urea, DAP,
NP/NPKs, SSP and MOP from 2024-25 to 2069-70.
Table V.3: Demand projection for m ajor fertiliser products (million tonnes)
Year UreaDAPComplex Fertiliser
2024-25361111
2049-50441514
2069-70511517 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 130
Annexure - V: Fertiliser Production Projection Methodology
Indigenous Supply Projection of Major Fertiliser Products
Production of urea, DAP and complex fertilisers during 2023-24 was at 31.41, 4.29, and 9.54
million tonnes, respectively. Consumption of urea, DAP and complex fertilisers was at 37.78, 10.81
and 11.07, respectively during 2023-24. Therefore, the level of self-sufficiency during 2023-24 on
urea, DAP and Complex fertilisers was at 83%, 40% and 86%, respectively. For DAP and NP/NPK
complex fertilisers the self-sufficiency is assumed to increase marginal, due to high dependency
on imported raw materials & intermediates. In the case of urea, it has been assumed that at
least one new urea plant of 1.27 million tonne would be commissioned in every five-year period.
Accordingly, the indigenous supply projection of major fertiliser products has been projected. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 131
Annexure - VI: Equivalency
Factors for the Conversion
of Crude Oil to Oil Products
ProductTypical Yield (% of Crude Oil)
Petrol20-25
Diesel38-45
ATF/SKO8-10
Naphtha2-2.5
LPG4-5
Fuel Oil10-12
Bitumen/Pet Coke9-10
Sulphur0.5-1
Fuel & Loss8-10
Table VI.1: Equivalency factors for the conversion of crude oil to oil products Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 132
Annexure - VII: Sector Specific Circularity Challenges & Suggestions
Annexure - VII: Sector
Specific Circularity
Challenges &
Suggestions
ChallengeSuggestions
Steel
Quality of scrap is low
There is limited deployment of advanced
sorting and processing technologies like
shredders, magnetic separators, and optical
sorters.
Contaminated scrap results in less yield and
more energy consumption.
Dependence on imports raises risks of
export restrictions, taxes, and conservation
measures.
Disruptions to the supply chain (for example,
conflicts and a sudden increase in shipping
costs) increase price volatility
Better pre-treatment
methods for scrap, for
instance, shredding
ELVs and removing
contaminants, must be
developed.
Scrap quality standards as
well as inspections should
be introduced.
Scrap sourcing must be
diversified and supply
chains made resilient.
Cement
Construction and demolition (C&D) waste
is often contaminated and inconsistent,
making processing difficult. India generates
an estimated 150–500 million tonnes of C&D
waste annually, but only a tiny fraction is
recycled.
Limited logistical capability to collect and
transport waste from demolition sites to
recycling plants.
Limited urban space for establishing
recycling facilities.
Limited technical capacity to produce
uniform, high-quality recycled aggregates
or fuel (RDF) from municipal waste.
Heterogeneous waste fuels (RDF from
municipal solid waste) often have inconsistent
calorific value and high moisture or chlorine
content, which can affect kiln operations.
Cement kilns need reasonably uniform, high-
energy-value fuel feed. Indian municipal
waste, in contrast, is often wet and mixed
with inert material.
Cheap virgin materials, lack of tipping fees
or financial incentives for using scrap make
recycled alternatives less competitive.
Invest in advanced
processing technologies
(such as smart crushers,
heat/mechanical
treatment) to separate
cement paste from
aggregates.
Pre-processing like
drying and shredding is
required to make RDF,
and removing problem
elements (chlorides, heavy
metals) is necessary to
avoid kiln corrosion or air
emissions issues.
Collection and transport
of C&D waste should be
organised.
Financial incentives
such as tipping fees for
waste usage should be
introduced.
Table VII.1: Sector specific circularity challenges & sugges tions Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 133
Annexure - VII: Sector Specific Circularity Challenges & Suggestions
ChallengeSuggestions
Aluminium
Scrap quality issues (similar to steel), costly
segregation, and dominance of informal
recycling.
Exposure to global supply shocks due to
import dependence.
Scrap imports are taxed at higher rates than
finished aluminium, thereby discouraging
recycling.
Contradictory positions taken by primary
producers and recyclers adds to the problem.
For example- Aluminium Association of
India (AAI) and FIMI (Federation of Mineral
Industries) support 10% duty whereas MRAI
(Metal Recycling Association of India) wants
zero duty.
Apply zero or minimal
import tariffs on metal
scraps (e.g. 2.5%).
Prioritizing the setting
up of Zorba sorting
technology, with a
focus on promoting
domestic manufacturing
of advanced sorting
equipment
Provide subsidies for
setting up advanced
sorting and smelting
facilities.
Encouraging joint
ventures or strategic
partnerships between
automobile manufacturers
and secondary aluminium
smelters
Actively attracting
foreign direct investment
from global auto parts
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upskilling-and-reskilling-in-the-cement-industry-statistics VOL. 4
SECTORAL INSIGHTS:
INDUSTRY
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
VOL. 11
SOCIAL IMPLICATIONS
OF TRANSITION
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
SECTORAL INSIGHTS:
INDUSTRY
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
VOL. 11
SOCIAL IMPLICATIONS
OF TRANSITION
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO Copyright © NITI Aayog, 2026
NITI Aayog
Government of India,
Sansad Marg, New Delhi–110001, India
Suggested Citation
NITI Aayog. (2026). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights:
Industry (Vol. 4)
Available at: https://niti.gov.in/publications/division-reports
Disclaimer
1.This document is not a statement of policy by the National Institution for
Transforming India (hereinafter referred to as NITI Aayog). It has been prepared
by the Green Transition, Energy, Climate, and Environment Division of NITI Aayog
under various Inter-Ministerial Working Groups (IMWGs) constituted to develop
Net-Zero pathways for India.
2.Unless otherwise stated, NITI Aayog, in this regard, has not made any representation
or warranty, express or implied, as to the completeness or reliability of the
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3.The assertions, interpretations, and conclusions expressed in this report are those
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conduct their analysis before forming conclusions or taking any policy, academic,
or commercial decisions. SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
SECTORAL INSIGHTS:
INDUSTRY
(VOL. 4) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry iii Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry iv Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry v Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry vi Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry vii
Authors and
Acknowledgement
Chairperson
Dr. V. K. Saraswat
Member, NITI Aayog
Leadership
Sh. Suman Bery
Vice Chairman, NITI Aayog
Sh. B.V.R. Subrahmanyam
CEO, NITI Aayog
Dr. Anshu Bharadwaj
Programme Director, Green Transition,
Energy & Climate Change Division, NITI
Aayog
Sh. Rajnath Ram
Adviser, Energy, NITI Aayog
Core Modelling Team
Sh. Venugopal Mothkoor
Energy and Climate Modelling Specialist,
NITI Aayog
Dr. Anjali Jain
Consultant, NITI Aayog
Sh. Nitin Bajpai
Consultant, NITI Aayog
Authors
NITI Aayog (Lead Authors)
Sh. Venugopal Mothkoor
Energy and Climate Modelling Specialist,
NITI Aayog
Dr. Anjali Jain
Consultant, NITI Aayog
Sh. Nitin Bajpai
Consultant, NITI Aayog
Ms. Srishti Dewan
Young Professional, NITI Aayog
Knowledge Partners
Sh. Vaibhav Chaturvedi
Senior Fellow, CEEW
Ms. Pallavi Das
Programme Lead, CEEW
Sh. Anurag Dey
Programme Associate, CEEW
Ms. Chetna Arora
Programme Associate, CEEW
Sh. Zaid Ahsan Khan
Programme Associate, CEEW
Ms. Shruti Dayal
Senior Program Associate, Ex-WRI India
Ms. Jyoti Sharma
Senior Program Associate, WRI India
Ms. Meghana Munagala
Senior Program Associate, WRI India
Sh. Abhijit Namboothiri
Program Associate, WRI India
Sh. Abhishek Bhardwaj
Senior Program Associate, WRI India
Ms. Gowthami T S
Program Manager, WRI India
Sh. NGR Kartheek
Senior Program Manager, WRI India
Sh. Arpan Golechha
Program Manager, WRI India
Ms. Ashwini Hingne
Associate Director, WRI India Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry viii
Peer Reviewers
Sh. Sharath Kumar Pallerla
Scientist G, Ministry of Environment,
Forest and Climate Change (MoEFCC)
Sh. Ajay Raghava
Deputy Director, Ministry of Environment,
Forest and Climate Change (MoEFCC)
Sh. Maimun Alam
Director, Ministry of Steel
Sh. Ravi Prajapati
Joint Director, BEE
Sh. Shikhar Jain
Executive Director, CII
Sh. Ravi Kumar
Consultant, NITI Aayog
Technical Editors
Sh. Nihar Gokhale
Communication Specialist (Independent)
Ms. Rishu Nigam
Communication Specialist (Independent)
Working Group Members
Sh. Jawahar Lal
Member Secretary of the Working Group,
General Manager (Energy), NITI Aayog
Sh. Venugopal Mothkoor
Member Secretary of the Working Group,
Energy and Climate Modelling Specialist,
NITI Aayog
Dr. L. P. Singh
Director General, NCCBM
Dr. Neeraj Sinha,
Adviser/Scientist ‘G’, PSA
Sh. Ashwini Kumar
Economic Advisor, Ministry of Steel
Sh. Shri Deepak Mishra
Jt. Secretary, (Petrochemicals Division),
Dept. of Chemicals and Petrochemicals
Ms. Sujata Sharma
Jt. Secretary (Marketing and Oil Refinery),
MoPNG
Sh. Anandji Prasad
Advisor (P), Ministry of Coal
Sh. Ashok Kumar
Deputy Director General (DDG), BEE
Sh. Sharath Kumar Pallerla
Scientist G, Ministry of Environment, Forest
and Climate Change (MoEFCC)
Sh. Vinamra Mishra
Director, MoMSME
Sh. Ajay Raghava
Deputy Director, Ministry of Environment,
Forest and Climate Change (MoEFCC)
Sh. Gaurav Kishore Joshi
Deputy Secretary (Manufacturing Sector),
Ministry of Heavy Industries
Sh. Bajrang Maheswari
Technical Consultant (Hydrogen &
Decarbonisation Strategies), Ministry of
Heavy Industries
Ms. Jyoti Mukul
Chief, Energy, CII
Sh. Hemant Mallya
Fellow, CEEW
Sh. Sobhanbabu PRK
Senior Fellow, TERI
Sh. Arpan Gupta
Director, FICCI
Sh. Sachin Kumar
Director, Shakti Sustainable Energy
Foundation
Ms. Gunjan Jain
Research Executive, FICCI
Ms. Ekta Sharma
Research Executive, FICCI Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry ix
Ms. Sarita Koli
Consultant, FICCI
Ms. Aditi Karki
Research Associate, FICCI
Sh. Sharvan Kr. Pushkar
Consultant, NITI Aayog (Co-ordinator)
Sh. Vishal Kumar
Young Professional, NITI Aayog
(Co-ordinator)
Collaborators/ Expert Consultants
Ms. Prachi Priya
Assistant Vice President, Economic & Public
Policy Research, Hindalco Industries Ltd
Sh. Himanshu Singh
Director (Strategy), Vedanta Ltd
Sh. Arvind Bodhankar
Head of Sustainability, AM/NS India
Sh. Deependra Kashiva
Director General, Sponge Iron Manufacturers
Association
Sh. Prakash Tatia
Welspun Steel Ltd.
Sh. R K Goyal
Managing Director, Kalyani Steels Ltd
Sh. Deepak Bhatnagar
Secretary General, Pellet Manufacturers
Association of India
Sh. Vijay Sharda
Chairman and Managing Director, Shabro
Metals & Technologies
Sh. Anil Dhawan
Director General, Alloy Steel Producers
Association of India
Sh. Rajeev Ranjan
GM (Business Planning), Steel Authority of
India Ltd
Sh. Koustuv Kakati
Head Regulatory Affairs (Trade & Economy),
Tata Steel Ltd
Sh. Sameer Singh
DGM - Sustainability, Jindal Stainless Ltd
Sh. V R Sharma
Vice Chairman, JSP Group Advisory Services
Sh. Prabodha Chandra Acharya
Chief Sustainability Officer, JSW Steel Ltd
Sh. Patel Sidhartha
Danieli India Ltd.
Sh. E R Raj Narayanan
Chief Manufacturing Officer, Ultra Tech
Cement Ltd
Sh. Ravindra Jain
Dy. General Manager (E&I), JK Lakshmi
Cement Ltd.
Sh. A.D. Saxena
Dy G M Geology, J K Lakshmi Cement Ltd
Sh. Yaswant Mishra
President (Corporate) and Chief Financial
Officer, Mangalam Cement
Sh. Rajesh Deoliya
Senior Vice President, My Home Industries
Pvt Ltd
Sh. Gajendra Pratap Singh
Joint President, Shree Cement Ltd
Sh. Narendra Singh
Chief Manufacturing Officer, Saurashtra
Cement Ltd
Sh. Birinder Singh
Director (Corporate Services), IFFCO
Sh. Vipul Varshney
DGM - Projects, YARA International Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry x
Communication and Research &
Networking Division, NITI Aayog
Ms. Anna Roy
Programme Director, Research & Networking
Sh. Yugal Kishore Joshi
Lead, Communication
Ms. Keerti Tiwari
Director, Communication
Dr. Banusri Velpandian
Senior Specialist, Research and Networking
Ms. Sonia Sachdeva Sharma
Consultant, Communication
Sh. Sanchit Jindal
Assistant Section Officer, Research and
Networking
Sh. Souvik Chongder
Young Professional, Communication
NITI Design Team
NITI Maps & Charts Team Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xi
Contents
List of Figures XIII
List of Tables XVI
List of Abbreviations XVII
Executive Summary XXI
1. Introduction.....................................................................................................................................1
2. Landscape of the Industry Sector in India............................................................................... 7
2.1 Indian Industry and the global context 8
2.1.1 Industrial Output: Sectoral Strengths 9
2.1.2 Energy and Emissions Profile 11
2.1.3 Lessons from Global Industrial Trends 12
2.2 Sectoral Deep Dives: Industry in the Indian and Global Context 12
2.2.1 Steel sector 12
2.2.2 Cement Sector 20
2.2.3 Aluminium Sector 24
2.2.4 Fertiliser Sector 28
2.2.5 Textile sector 31
2.2.6 Paper & Pulp 35
2.2.7 Ethylene 36
2.2.8 Chlor-Alkali 38
2.2.9 Refinery 39
2.2.10 Other Energy-Intensive Sectors: MSME sector 42
2.3 Low-Carbon Transition Levers: Global and National Industry Landscape 44
2.3.1 Energy Efficiency 44
2.3.2 Electrification 46
2.3.3 Low-Carbon Electricity Production 48
2.3.4 Alternative Fuels 49
2.3.5 Circular Economy 52
2.3.6 Carbon Capture, Utilisation, and Storage 54
2.3.7 Carbon Management 56 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xii
Contents
3. Industry Sector Modelling and Results..................................................................................59
3.1 Modelling Framework 60
3.2 Results for Industry Sub-sectors 63
3.2.1 Steel 63
3.2.2 Cement 69
3.2.3 Aluminium 74
3.2.4 Textile 79
3.2.5 Paper and Pulp 82
3.2.6 Ethylene 86
3.2.7 Chlor-Alkali 90
3.2.8 Fertiliser 94
3.2.9 Refineries 98
3.3 Overall Industry Results and Summary 102
4. Challenges and Suggestions.....................................................................................................111
4.1 Improving Energy Efficiency 112
4.2 Building Circularity in Manufacturing 113
4.3 Electrification of Industrial Energy Demand 116
4.4 Deployment of new technologies and fuels 117
4.5 Jobs and Trade-Enablers of Transition 119
Annexures...........................................................................................................................................123
References..........................................................................................................................................135 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xiii
List of Figures
Figure 1.1: Approach for developing the Net Zero Pathway 4
Figure 2.1: Industry (including construction), value added (% of total GVA) 9
Figure 2.2: Materials production of G7 members in the context of global production
(million tonnes) 10
Figure 2.3: Aluminium production of G7 members in the context of global production
(million tonnes) 10
Figure 2.4: Contribution of industry sub-sector emissions in 2022 (Globally) 11
Figure 2.5: Global comparison of steel production and consumption (million tonnes) 13
Figure 2.6: Historical production and consumption of steel (million tonnes) (MoS, 2024) 14
Figure 2.7: Technology-wise steel production, 2023-24 (MoS, 2024) 15
Figure 2.8: Estimated fuel-wise specific energy consumption 16
Figure 2.9: Energy mix (Mtoe, %) in steel sector in 2020 16
Figure 2.10: Global comparison of cement production, consumption, emissions,
and per capita consumption (million tonnes) 20
Figure 2.11: Historical production of cement (million tonnes) 21
Figure 2.12: Energy mix (Mtoe, %) in cement sector in 2020 22
Figure 2.13: Historical production of aluminium (million tonnes) 26
Figure 2.14: Energy mix (Mtoe, %) in aluminium sector in 2020 26
Figure 2.15: Historical production of major fertilisers, (million tonnes) 29
Figure 2.16: Estimated fuel-wise specific energy consumption of major Fertilisers 30
Figure 2.17: Historical production of textile, (million tonnes) 32
Figure 2.18: Energy mix (Mtoe, %) in textile sector 33
Figure 2.19: Historical production of paper and pulp through different routes (million tonnes) 35
Figure 2.20: Estimated specific energy consumption of paper and pulp industry (GJ/t) 36
Figure 2.21: Historical production of ethylene (million tonnes) 37
Figure 2.22: Estimated fuel consumption in ethylene production (GJ/t) 37
Figure 2.23: Historical production of chlor-alkali products (million tonnes) 38 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xiv
List of Figures
Figure 2.24: Estimated specific energy consumption in chlor-alkali products (GJ/t) 39
Figure 2.25: Historical trend of refining capacity in India (million tonnes) 40
Figure 2.26: Historical production of various petroleum products (million tonnes) 40
Figure 2.27: Fuel consumption in refinery sector in India (GJ/t) 41
Figure 2.28: Emission distribution across Indian MSME sectors 42
Figure 2.29: Key barriers to MSME adoption of sustainable energy solutions 44
Figure 2.30: Global industrial heat demand across low, medium, and high temperature ranges 46
Figure 2.31: Grid dependence across key industrial sectors (2022–23) 48
Figure 3.1: Modelling framework 61
Figure 3.2: Global comparison of GDP/capita vs steel use/capita 64
Figure 3.3: Crude steel production (million tonnes) 64
Figure 3.4: Final energy consumption in steel sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 66
Figure 3.5: Technology-wise steel production (million tonnes) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 67
Figure 3.6: Emission intensity of steel sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 67
Figure 3.7: Global comparison of GDP/capita vs cement use/capita 70
Figure 3.8: Cement production (million tonnes) 70
Figure 3.9: Final energy consumption in cement sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 72
Figure 3.10: Emission intensity of cement sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 73
Figure 3.11: Global comparison of GDP/capita vs aluminium use/capita 74
Figure 3.12: Aluminium production (million tonnes) 75
Figure 3.13: Final energy consumption in aluminium sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 77
Figure 3.14: Emission intensity of aluminium sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 78
Figure 3.15: Textile sector production (million tonnes) 79
Figure 3.16: Final energy consumption in textile sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 81
Figure 3.17: Emission intensity of textile sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 81
Figure 3.18: Projections for paper and pulp production (million tonnes) 83
Figure 3.19: Final energy consumption in pulp and paper sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 84 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xv
List of Figures
Figure 3.20: Emission intensity of paper & pulp sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) 85
Figure 3.21: Projection of ethylene production in India (million tonnes) 86
Figure 3.22: Final energy consumption in ethylene (Mtoe) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 88
Figure 3.23: Emission intensity of ethylene sector (tCO
2
/t) under Current Policy Scenario (CPS) and
Net Zero Scenario (NZS) 88
Figure 3.24: Chlor-Alkali products production (million tonnes) 90
Figure 3.25: Final energy consumption in caustic soda industry (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 91
Figure 3.26: Final energy consumption in the soda ash industry (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 92
Figure 3.27: Emission intensities for caustic soda (left) and Soda Ash (right) (tCO
2
/t) under
Current Policy Scenario (CPS) and Net Zero Scenario (NZS) 92
Figure 3.28: Major fertiliser products production (million tonnes) 94
Figure 3.29: Final energy consumption of major fertiliser products (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 95
Figure 3.30: Emission intensity of the fertiliser sector (tCO
2
/t) 96
Figure 3.31: Final energy consumption in refinery (Mtoe) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 99
Figure 3.32: Emission intensity of refinery sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 100
Figure 3.33: Overall industrial energy supply mix and fuel type for captive electricity, 2020 102
Figure 3.34: Projections of demand (Mtoe) under Current Policy Scenario (CPS) and Net Zero
Scenario (NZS) 103
Figure 3.35: Green hydrogen projection in CPS and NZS (million tonnes) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) 104
Figure 3.36: Net Zero Scenario - share of scrap in steel and aluminium, and clinker to cement
ratio in cement production projections 105
Figure 3.37: Break-up of residual emissions (MtCO
2
) 106
Figure 3.38: Total investment requirement (USD Trillion) 106
Figure 3.39: Technology-wise Investment requirement in NZS (USD Trillion) 107 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xvi
List of Tables
Table 2.1: Global and industrial GHG emissions (Million Tonnes of CO
2
equivalent) 11
Table 2.2: Summary of energy savings (BEE, 2023-24) 45
Table 2.3: Policy instruments supporting energy efficiency in industry 45
Table 2.4: Temperature range of potential electric heating technologies 47
Table 2.5: Schemes facilitating electrification of industrial processes 47
Table 2.6: Renewable electricity usage by industry (2022–23) (BEE, 2022-23) 49
Table 2.7: Policies enabling procurement and use of low-carbon electricity 49
Table 2.8: Types of low-carbon fuels 50
Table 2.9: Green hydrogen projects, (MNRE, 2023) 51
Table 2.10: Government initiatives promoting low-carbon and alternative fuels 52
Table 2.11: Circular economy policies for resource recovery and industrial recycling 53
Table 2.12: CCUS projects and initiatives in India 54
Table 2.13: Carbon management and trading mechanisms for industrial emission reduction 56
Table 3.1: Scenario assumptions for steel sector 65
Table 3.2: Scenario assumptions for cement sector 71
Table 3.3: Scenario assumptions for aluminium sector 76
Table 3.4: Scenario assumptions for textile sector 80
Table 3.5: Scenario assumptions for paper and pulp sector 83
Table 3.6: Scenario assumptions for ethylene sector 87
Table 3.7: Scenario assumptions for chlor-alkali sector 91
Table 3.8: Scenario assumptions for fertiliser sector 94
Table 3.9: Scenario assumptions for refineries sector 98
Table 3.10: Projections of demand breakup under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) 103
Table 4.1: Challenges and suggestions for improving energy efficiency 113
Table 4.2: Challenges and suggestions for building circularity in manufacturing 114
Table 4.3: Challenges and suggestions for electrification of industrial energy demand 116
Table 4.4: Challenges and suggestions for deployment of new technologies and fuels 118
Table 4.5: Challenges and suggestions for managing jobs and trade 120
List of Tables Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xvii
List of Abbreviations
List of Abbreviations
ACCAdvanced Chemistry Cell
ADEETIE Assistance in Deploying Energy-Efficient Technologies in Industries and
Establishments
BF-BOFBlast Furnace–Basic Oxygen Furnace
BEEBureau of Energy Efficiency
BRSRBusiness Responsibility and Sustainability Report
CAPEXCapital Expenditure
CBAMCarbon Border Adjustment Mechanism
CCUSCarbon Capture, Utilisation and Storage
CH₄Methane
CO₂Carbon dioxide
CO₂eCarbon dioxide equivalent
COPConference of the Parties
CPCBCentral Pollution Control Board
CPPRICentral Pulp and Paper Research Institute
CPSCurrent Policy Scenario
DCDesignated Consumer
DRIDirect Reduced Iron
EAFElectric Arc Furnace
EEEnergy efficiency
EEFP
ELVs
Energy Efficiency Financing Platform
End-of-Life Vehicles
ESCOEnergy Service Company
ETSEmissions Trading System
FDIForeign Direct Investment
GDPGross Domestic Product
GeMGovernment e-Marketplace
GH
2
Green Hydrogen
GJGiga Joule Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xviii
List of Abbreviations
GoIGovernment of India
GtGiga Tonne
H₂Hydrogen
IAEAInternational Atomic Energy Agency
IEAInternational Energy Agency
IESSIndia Energy Security Scenarios
IPCCIntergovernmental Panel on Climate Change
IPMAIndian Pulp and Paper Manufacturers Association
IREDAIndian Renewable Energy Development Agency
ISOInternational Organisation for Standardisation
kWhKilo Watt-Hour
LC3Limestone Calcined Clay Cement
LTSLong-Term strategy
MACCMarginal Abatement Cost Curve
MDBSMultilateral Development Banks
MoMSMEMinistry of Micro, Small and Medium Enterprises
MNREMinistry of New and Renewable Energy
MoEFCCMinistry of Environment, Forest and Climate Change
MoPMinistry of Power
MoPNGMinistry of Petroleum and Natural Gas
MoRTHMinistry of Road Transport and Highways
MoSMinistry of Steel
MSMEMicro, Small and Medium Enterprises
Mt Million Tonnes
N₂ONitrous Oxide
NDCNationally Determined Contribution
Net Zero A state in which anthropogenic greenhouse gas emissions are balanced by
removals over a specified period
NZ / NZS Net Zero / Net Zero Scenario
OPEXOperating expenditure
PATPerform, Achieve and Trade
PLIProduction-Linked Incentive
PPPPublic–Private Partnership
R&DResearch and Development
RCORenewable Consumption Obligation
RERenewable Energy Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xix
List of Abbreviations
RESCORenewable Energy Service Company
RFNBORenewable Fuels of Non-Biological Origin
SAFSustainable Aviation Fuel
Scope 1 Direct GHG emissions from owned/controlled sources
Scope 2 Indirect GHG emissions from purchased electricity/steam/heat/cooling
Scope 3 All other indirect emissions in a value chain
SECs / ESCerts Energy Saving Certificates (under PAT)
SIDBISmall Industries Development Bank of India
SMRSmall Modular Reactor
T&DTransmission and Distribution
TIMESThe Integrated MARKAL EFOM System
TOETonne of Oil Equivalent
UNFCCCUnited Nations Framework Convention on Climate Change
ZEDZero Defect Zero Effect (MSME certification/programme) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xx Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxi
Executive Summary
India has set twin goals of becoming a developed, high-income economy by 2047 and achieving
Net Zero emissions by 2070. The industrial sector is at the heart of this effort, as it is a key
driver of economic growth and a major source of greenhouse gas (GHG) emissions. Industrial
growth will surge, as India’s GDP moves toward a projected USD 30 trillion by 2047 as demand
for steel, cement, chemicals and other materials will increase many times, leading to increased
energy use. Industry sector accounts for nearly 24% of India’s total GHG emissions (excluding
emissions from electricity use) in 2020. Major emitters in this sector include steel, cement and
aluminium (the largest contributors), followed by chemicals, fertilisers, and other manufacturing.
Decoupling industrial growth from carbon emissions is imperative for “green growth,” yet this
transition poses a significant challenge given the reliance on fossil fuels for around 83% of
industrial energy.
Modelling Approach
It is in this context, NITI Aayog’s Inter-Ministerial Working Group, constituted for industrial sector
has delved into various facets of industrial energy transition including industrial output, energy
demand across major subsectors: steel, cement, aluminium, textiles, petrochemicals, paper &
pulp, fertilisers, refinery, chlor-alkali and other manufacturing. The comprehensive framework
adopted for modelling industrial sector adopts two scenarios: Current Policy Scenario (CPS)
and Net Zero Scenario (NZS), within which the goal of becoming developed economy has been
kept sacrosanct. The framework integrates granular data on technology options, fuel choices,
and material efficiency, while reflecting on-going national programmes such as the National
Green Hydrogen Mission, renewable energy expansion, and green industrial initiatives.
The modelling of industrial sector is carried out using in-house models India Energy Security
Scenarios (IESS) and TIMES (The Integrated MARKAL-EFOM System) for sectoral activity
projections, fuel switching pathways, and emissions reduction strategies to 2070.
Key Modelling Insights
Multi-fold Industrial Demand Growth Aligned with Viksit Bharat
India’s industrial commodity demand is set to rise multi-fold as urbanisation, infrastructure build-
out, housing, and manufacturing at a scale. By mid-century, India’s per-capita use approaches
levels seen in today’s developed economies. As incomes rise toward high-income economy
levels (around USD 18,000+), per-capita use is projected to converge toward high-income
norms, reaching ~356 kg steel, ~921 kg cement, and ~16 kg aluminium by 2050. While the per
capita use increases, the objective is not to maximise consumption, instead to meet needs Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxii
Executive Summary
sustainably and resource-efficiently. Major transition levers of the industry sector’s low-carbon
transition will include electrification of industrial processes, efficiency aligned with international
best standards, non-fossil fuel-based captive power, improvements in material efficiency and
recycling, and increased use of biomass and green hydrogen.
Energy mix transforms decisively from fossil to clean sources.
Under Current Policy Scenario, fossil fuels remain the dominant energy source with 72% share
by mid-century, and 52% by 2070 (vs 83% in 2025). Under Net Zero Scenario, the energy mix
shifts fundamentally, electrification driven by non-fossil power increases from 16% in 2025 to
55% by 2070. Green hydrogen emerges as a critical fuel for low-carbon transition in steel,
refineries and fertilisers, rising from low-base today to 42 Mt by 2070 in Net Zero Scenario.
Biomass and waste heat recovery also play a crucial role in industrial low-carbon transition. By
2070, fossil share declines to 26% in Net Zero Scenario, and the residual fossil capacity largely
operates with Carbon Capture Utilisation and Storage (CCUS).
Circular economy and material efficiency unlock significant abatement.
Under the enabling conditions for circular economy, in Net Zero Scenario, steel scrap utilisation
increases from 22% to 30% by 2050 and 40% by 2070, thereby reducing reliance on energy-
intensive ore-based smelting processes. Also, in cement, clinker ratio is expected to lower
from 0.67 in 2024 to 0.55 by 2070 with higher use of supplementary cementitious materials
(slag, calcined clay, pozzolans), avoiding nearly 50-100 Mt of clinker annually during 2050-70.
Aluminium recycling serves 40% of 2070 demand while using just 5% of the energy of primary
production. These circular measures decouple growth from raw-material use and emissions.
Technology transition is central to emissions reduction.
Industrial low-carbon transition depends heavily on technologies that are still emerging or not yet
commercial at scale. The study finds that half of the emissions reductions rely on technologies
currently not available at scale such as Green Hydrogen, CCUS, Small Modular Reactors (SMRs)
and high cost electrification solutions such as electricity boilers or Heat pumps. Many of these
solutions are in pilot or demonstration phases today. India is actively exploring these frontiers
through the National Green Hydrogen Mission, which targets 5 Mt of production by 2030;
adoption of new cement blends like Limestone Calcined Clay Cement (LC3), which can cut
cement process CO₂ emissions by 40%; launch of five industrial CCUS test beds in the cement
sector in 2025; and plans to deploy SMRs to supply clean process heat and power for industry. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxiii
Executive Summary
Indicator Snapshot
Table E1: Current Policy Scenario vs Net Zero Scenario – 2050 & 2070
Indicator
Current Policy
Scenario
Net Zero Scenario
2050 2070 2050 2070
Industrial
Output
Steel (
million tonnes)624 821 624 821
Cement (
million tonnes) 1592 1985 1592 1985
Aluminium (
million tonnes) 28 38 28 38
Circularity
Steel - Scrap Utilisation (%) 20% 20% 30% 40%
Cement - Clinker Ratio0.65 0.6 0.62 0.55
Aluminium - Scrap Utilisation (%) 30% 30% 36% 40%
Industrial Energy Demand (Mtoe)980 1150 890 980
Fossil Use (Mtoe/%)700/72% 700/61% 460/52% 250/26%
Electricity Use (Mtoe/%)231/24%340/29% 330/37% 540/55%
Green Hydrogen (million tonnes)8.5 24 22 42
CCUS Deployment (MtCO₂e/yr)Nil Low ~1,000
Investment Requirement (2026–2070, USD trillion)* USD 4.5 trillion USD 6.1 trillion
*Refer IMWG report on Financing Needs (Vol. 9) for investment requirements
Priority Challenges and Policy Suggestions
While low-carbon transition in industry is technically feasible, achieving Net Zero depends
on technologies still emerging or not yet commercial at scale. The transition faces several
systemic barriers that could raise transition costs, prolong fossil fuel dependence, and delay
socio-economic gains. India’s industrial low-carbon transition rests on four structural pillars:
Energy Efficiency, Circularity, Electrification, and Clean Fuels & Technologies, supported by an
enabling ecosystem of finance and skilled labour.
1. Energy efficiency barriers
Energy efficiency is fundamental to low-carbon transition; the International Energy Agency
(IEA) labels it the “first fuel”, yet global efficiency improved by just 1% in 2024. India’s
Perform, Achieve and Trade (PAT) scheme covers 1,333 entities and achieved 8% annual
energy savings, but critical barriers still persist.
Key Barriers: Weak performance monitoring (3-year audit cycle too infrequent), absence of
uniform benchmarks for thermal processes, limited access to affordable finance for Micro, Small
and Medium Enterprises (MSMEs), prevalence of outdated technologies (inefficient motors,
coal-fired boilers), and significant waste heat being vented instead of recovered. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxiv
Executive Summary
Policy Suggestions:
i. Energy Performance monitoring
a. Shift to continuous digital verification using Internet of Things (IoT) and Artificial
Intelligence (AI) with ISO 50001 standardisation
b. Enhance Bureau of Energy Efficiency (BEE’s) benchmarking portal
ii. Financing and Technology modernisation
a. Scale Assistance in Deploying Energy Efficient Technologies in Industries &
Establishments (ADEETIEs) through interest subvention
b. Institutionalise Energy Service Company (ESCO) models in key clusters
c. Treat waste heat recovery as renewable
d. Promote heat pumps for low-temperature applications through viability gap
funding
2. Circular economy and material recovery
Strong reliance on virgin materials drives resource depletion and emissions. India’s circular
economy is expected to reach USD 2 trillion and create 10 million jobs by 2050.
Key Barriers: Low quality of recycled materials, feedstock inconsistency, logistical fragmentation
(transport costs outweigh material value), multiple regulatory layers, limited domestic scrap (India
imported 8.69 Mt ferrous scrap in 2024), global export restrictions and import dependency on
waste processing equipment.
Policy Suggestions:
i. Creating demand for circularity
a. Introduce rigorous Bureau of Indian Standards (BIS) grading standards
b. Notify Green Public Procurement norms
c. Enable Digital Product Passports for traceability
d. Expand Extended Producer Responsibility (EPR) to further products and material
(e.g. textiles, footwear, etc.)
e. Introduction of minimum recycled content guidelines for key sectors
ii. Waste Management
a. Promote aggregation platforms and waste exchange clusters
b. Establish decentralised sorting and pre-processing centres through PPP model
c. Promote unified waste license system via digital single-window
d. Prioritise domestic waste equipment manufacturing
e. Formalise informal workers via verified IDs and training
iii. Import dependency on scrap
a. Rationalise GST and import duties, favouring recycling
b. Promote advance sorting technologies (shredders, zorba, optical sorters).
3. Industrial electrification
Industrial electrification is 16% in 2025 with huge potential to scale. Replacement of fossil-
fuel heat with electric alternatives will not only result in lower emissions but also strengthen
competitiveness. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxv
Executive Summary
Key Barriers: High electricity costs (due to cross-subsidies for domestic use), reliability constraints
(frequent outages force reliance on captive coal plants), technology gaps (electricity-based
high-temperature processes still nascent), skill shortages in EPC and O&M, and high upfront
capital costs for MSMEs.
Policy Suggestions:
i. Ensuring affordable and reliable electricity
a. Rationalise power tariffs reflecting true costs
b. Enforce Time-of-Day pricing
c. Facilitate open-access approvals
d. Scale Renewable Energy Service Company (RESCO) models aggregating demand
e. Deploy Firm Dispatchable Renewable Energy contracts
f. Establish dedicated industrial power feeders for assured 24×7 supply
ii. Technology Readiness and Financing
a. Develop sectoral electrification roadmaps linking temperature ranges to
technologies
b. Provide blended finance for mature electric technologies
c. Include heat pumps and electric boilers in the National Manufacturing Mission
4. New technologies and fuels
Hard-to-abate sectors rely on technologies (Green Hydrogen Direct Reduced Iron (GH₂-DRI),
electric crackers, CCUS), fuels (green hydrogen), and materials (LC3, inert anodes), that
are still at nascent stages. High costs, limited raw materials, fragmented policies, and weak
standardisation hinder investment.
Key Barriers: High technology risks and costs (first-of-a-kind projects face uncertain returns),
limited raw materials (LC3 constrained by poor clay availability), financing constraints, lack of
product taxonomy, weak R&D ecosystem with poor industry-academia linkages, critical mineral
supply risks (Ni, Li, Co, PGMs).
Policy Suggestions:
i. Scale development and deployment of new fuels
a. Government and MDBs to support pilot projects in H₂-DRI, inert anodes, CCUS
b. Create assured offtake platforms such as Sustainable Aviation, Maritime, Steel
Buyers Alliances leveraging Article 6.2/6.4
c. Strengthen climate taxonomies to explicitly include all low-carbon process routes/
technologies, with clear benchmarks, and thresholds
d. Government and industry bodies to roll out Type III eco-labels and rating systems
for key materials
e. Provide Viability Gap Funding and deploy blended finance for technologies which
have high upfront costs and risks
ii. Domestic Manufacturing and R&D Ecosystem
a. Scale up Production Linked Incentive (PLI) schemes to cover the full value chain
of clean technologies
b. Establish R&D centres of excellence with joint ventures between domestic firms,
global providers, and research institutions Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry xxvi
Executive Summary
iii. Domestic Manufacturing and R&D Ecosystem
a. Identify and create calcined clay clusters to secure raw material supply
b. Strengthen the supply chain for biomass pellets/briquettes through aggregator
incentives and storage infrastructure
c. Secure long-term international offtake agreements for critical minerals
5. Employment, skills, and trade competitiveness
Industrial low-carbon transition requires a skilled workforce and adaptive trade strategy
against emerging global trade regulations including on carbon.
Key Barriers: Skill shortage and job displacement risks in affected regions and sectors, impact
of European Union’s Carbon Border Adjustment Mechanism (CBAM) on Indian steel/aluminium
exports, protective tariffs on input materials, and lack of green export branding.
Policy Suggestions:
i. Employment:
a. Institutionalise Sector Skill Council (SSC)-industry collaboration for continuous
curriculum updates and strengthening certification systems through employer-
led assessments
b. Emphasise on-the-job training in emerging technologies
c. Develop transition skill roadmaps
d. Establish national skills intelligence system
e. Create a worker retraining policy with relocation support and district economic
diversification frameworks
ii. Trade:
a. Accelerate low-carbon transition in export sectors
b. Institutionalise periodic tariff stocktakes
c. Launch “Green Stamp” initiative showcasing environmental footprint
d. Develop standardised and interoperable Life Cycle Assessment (LCA) frameworks
and implement digital product passports
Conclusion
Industrial low-carbon transition represents both a critical challenge and an opportunity. As India
pursues developed-nation status, its industrial sector transition requires success in technology
upgrades, electrification, renewable adoption, resource efficiency, innovative financing,
supportive policies, stronger institutional frameworks, and capacity-building across energy-
intensive and MSME segments. This transformation can position India as a global leader in
sustainable industrialisation, driving competitiveness, creating green jobs, and aligning growth
with climate commitments.
1 1
INTRODUCTION Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 2
Introduction
India is embarking on a historic development journey to achieve the twin objectives of becoming
a developed economy (Viksit Bharat by 2047) and achieving Net Zero emissions by 2070. The
industrial sector lies at the heart of this transformation, serving as a cornerstone of economic
growth while also representing one of the largest sources of Greenhouse Gas (GHG) emissions.
As industrialisation, urbanisation, and rising living standards reshape India’s economy, demand
for materials and energy will increase sharply. With GDP projected to reach USD 30 trillion
(current prices) by 2047, the output of steel, cement, chemicals, and other industrial products
is expected to multiply. Meeting this demand in a manner consistent with Net Zero goals
requires a fundamental shift towards affordable, reliable and low-carbon energy sources, while
simultaneously safeguarding energy security, employment, and social outcomes. India views
this transformation as an opportunity to reshape its industrial landscape. The Honourable
Prime Minister has characterised this moment as a “green industrial revolution”, emphasising
the potential for low-carbon technologies to drive competitiveness and job creation. India
has assumed a leadership role internationally, co-chairing the Leadership Group for Industry
Transition (LeadIT) alongside Sweden to advance the decarbonisation of heavy industries.
Domestic initiatives such as Make in India and related programmes are strengthening clean-
energy manufacturing capabilities, positioning India as an integral part of global value chains
(GVCs) while meeting domestic demand.
A Legacy of Industrial Strength
Historically, India was a major industrial and trading powerhouse. Before colonial disruptions,
the country accounted for roughly a quarter of global textile manufacturing, renowned for fine
cotton and silk clothed markets worldwide. Indian metallurgy was equally distinguished: wootz
steel, widely regarded as the finest in the world in 12th-century records, was exported globally
for weapon-making. India was also a maritime leader. By the 18
th
century, shipyards in Surat,
Bombay, and Calicut were reportedly constructing up to 40% of the world’s ships, reflecting
early integration into global trade and technological networks (Scammell, 2000).
This industrial dominance gradually eroded as colonial policies reshaped production systems
and trade relationships. Over the past few decades, however, a series of structural reforms,
including the Goods and Services Tax (GST), Production Linked Incentive (PLI) schemes, the
Make in India, Startup India, and the National Industrial Corridor Development Programme, have
supported India’s re-emergence as a significant global industrial player. India is now the world’s
second-largest producer of cement, steel and aluminium with cement efficiency being among
the best globally. It is also the second-largest importer of scrap steel, reflecting a growing
emphasis on recycling and reduced reliance on virgin iron ore. Across sectors, manufacturers are
1 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 3
Introduction
increasingly embracing sustainability, with some firms leading global rankings in environmental,
social and governance (ESG) performance. These strengths position the Indian industry to
leapfrog towards low-carbon development pathways.
Emissions and Energy
Industry is the largest end-use energy-consuming sector in India. More than 80% of industrial
energy demand is met by fossil fuels—coal, oil, and natural gas—while electrification remains
limited at around 16%, below the national average of 21% (estimated). Coal is extensively used
in iron and steel production (as coke in blast furnaces), cement manufacturing (as kiln fuel), and
chemical industries. Natural gas plays a critical role in fertiliser production, both as feedstock
for ammonia and as a fuel, and is also used in ceramics and glass manufacturing.
This fossil fuel-intensive profile results in substantial CO₂ emissions. According to India’s
Fourth Biennial Update Report (2024), manufacturing industries and emissions from Industrial,
Processes and Product Use (IPPU) together account for around 24% of gross Greenhouse Gas
(GHG) emissions, excluding emissions from electricity use. Steel and cement are the largest
contributors, followed by aluminium, chemicals, and fertilisers.
Green Technologies and Transition Opportunities
Enabling a low-carbon transition in India’s industrial sector will require unprecedented levels of
technological adoption and innovation. Several critical technologies, such as Green Hydrogen,
Carbon Capture, Utilisation, and Storage (CCUS), electrification of industrial processes, and
Small Modular Reactors (SMRs), are yet to achieve commercial maturity, and India is actively
exploring these pathways. The central challenge is to reduce cost and scale these solutions
from pilot and demonstration stages to mass deployment. Doing so will require supportive
policies, access to finance, and enabling infrastructure such as hydrogen pipelines, CO₂ transport
networks, and grid upgrades.
Indian industry has begun to engage with this transition. More than 127 Indian companies have
committed to Net Zero targets under the Science Based Targets initiative (SBTi), placing India
sixth globally in terms of corporate climate commitments. However, participation among heavy
industrial sectors remains limited: fewer than 10% of major firms in sectors such as power, steel,
and cement have adopted Net Zero targets to date (Seneca ESG, 2024).
Regulatory measures are accelerating momentum. The Securities and Exchange Board of India
(SEBI) now requires the top 1,000 listed companies to disclose Environmental, Social, and
Governance (ESG) metrics under the Business Responsibility and Sustainability Report (BRSR)
framework, including emissions, climate risks, and mitigation efforts. This has strengthened
transparency and accountability. International developments are also shaping incentives. The
European Union’s (EU’s) Carbon Border Adjustment Mechanism (CBAM) applies a carbon
price to imports of steel, cement, aluminium, and other carbon-intensive products. While such
measures underscore the growing importance of emission intensity reduction, they also raise
concerns about unilateral trade actions that may disproportionately affect developing countries
with limited historical responsibility for climate change. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 4
Introduction
Mission LiFE and Societal Engagement
India’s climate strategy extends beyond industry to a people-centric movement. Mission LiFE
(Lifestyle for Environment), launched by the Honourable Prime Minister in 2022, calls for large-
scale behavioural change toward sustainable production and consumption. In the industrial
context, Mission LiFE promotes demand for sustainable products, reinforcing the incentive for
firms to manufacture green goods—from eco-labelled textiles to low-carbon cement (MoEFCC,
2022).
Digital public infrastructure is supporting this transition. The India Energy Stack, currently under
development, is envisaged as an open digital backbone that will support smart grids, electric
vehicle integration, and real-time energy management. Much as the Unified Payments Interface
(UPI) transformed digital finance, the energy data stack is expected to unlock innovation and
transparency in energy use, empowering industries and consumers alike to optimise efficiency
and integrate renewable energy at scale.
With its growing economic influence, India has the opportunity to demonstrate a distinctive
model of “green growth” —one in which industrial expansion aligns with climate stewardship.
An emphasis on quality, innovation, affordability, and sustainability can position India as a
preferred supplier for climate-conscious global markets. By investing in cleaner technologies and
adopting global best practices, India aims to emerge as a trusted and responsible production
hub, delivering on the twin goals of prosperity and planetary well-being. Achieving Net Zero
by 2070 is a formidable task, but with strategic planning, international collaboration through
technology sharing and affordable finance, and broad participation from government, industry,
and communities, India’s industrial transition can set a benchmark for emerging economies.
Institutional Mechanism: Inter-Ministerial Working Group on Industry
The Inter-Ministerial Working Group on Industry is one of the ten working groups constituted
by NITI Aayog to develop a long-term development vision aligned with India’s commitment to
becoming a developed nation by 2047 and to achieve Net Zero emissions by 2070. Collectively,
these groups examine macroeconomic dimensions of the transition, sectoral implications across
industry, transport, power, buildings, and agriculture, requirements for climate finance and critical
minerals, and the social implications of the Net Zero pathway (Figure: 1.1).
Policy Mandates,
Viksit Bharat
Vision and
Working Group
Guidance
Data and
Literature
Review
Industry Specific
benchmarking
(India & Global)
Stakeholder
Consultation
• Academia
• Think tank
• Industry
• Association
• Ministry
Analysis &
Pathway
Modelling
Scenario
modelling
frameworks
(IESS/TIMES)
Decarbonisation
Roadmap
Policy and
Technology
Suggestions
Figure 1.1: Approach for developing the Net Zero Pathway Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 5
Introduction
The Inter-Ministerial Working Group on Industry was mandated to assess the current state and
long-term evolution of India’s industrial ecosystem, covering energy use, emissions intensity,
technology maturity, and investment requirements, and to suggest a comprehensive transition
pathway through 2070. To address these objectives, a structured and collaborative roadmap
development process was adopted.
Composition of the Working Group:
Chair: Dr. V.K. Saraswat, Member, NITI Aayog
Representatives from Ministries/Departments: Steel, Coal, Power, New & Renewable Energy,
Petroleum & Natural Gas, Chemicals & Fertilisers, Heavy Industries, Micro, Small & Medium
Enterprises, Mines, Commerce & Industry, Environment, Forest and Climate Change.
Key institutions: Bureau of Energy Efficiency (BEE) selected central public sector enterprises,
and technical institutions in steel, cement, power, fertilisers, and other energy-intensive industries.
Industry and knowledge partners: Industry associations and sector platforms, along with leading
think tanks and research organisations working on industrial low-carbon transition, technology
pathways, energy systems modelling, and climate policy.
Stakeholder consultations across individual subsectors provided valuable insights into the
deployment of low-carbon technologies, including adoption requirements, key challenges and
opportunities, and the role of research and development in reducing costs, accelerating uptake,
and improving efficiency. Common themes emerged across these consultations, including
sector-specific needs and opportunities, the applicability of decarbonisation pillars, and the
technological advancements required to support long-term emission reduction goals.
The Terms of Reference (ToR) of the Inter-Ministerial Working Group on Industry include the
following:
i. Examine the potential of growth across industrial sub-sectors, including energy
consumption implications, in line with GDP growth and structural economic shifts.
ii. Examine the role of energy efficiency improvements and technology shifts across
industrial sub-sectors.
iii. Examine the impact of shifts to cleaner and alternative fuels and demand-side
electrification on emissions, energy consumption, and energy security, particularly
in hard-to-abate sectors.
iv. Assess the potential of circular economy and resource efficiency to reduce demand
for virgin materials.
v. Assess the potential of CCUS in industrial decarbonisation, particularly in hard-to-
abate sectors.
vi. Examine industrial competitiveness in the context of global developments such as
the Carbon Border Adjustment Mechanism (CBAM).
vii. Examine transition risks faced by micro, small and medium enterprises (MSMEs).
viii. Analyse sources of finance and financing instruments for industrial low-carbon
transition. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 6 2
LANDSCAPE OF THE
INDUSTRY SECTOR
IN INDIA Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 8
2
Landscape of the
Industry Sector in India
India stands at a strategic crossroads in the evolving global industrial landscape. Geopolitical
shifts, the restructuring of global value chains (GVCs), and a global push toward sustainability
are driving demand for resilient, diversified, and low-carbon manufacturing hubs. India is
well-positioned to respond, leveraging its large and young workforce, with over 60% of the
population in the working-age bracket, an expanding domestic market, and a competitive
manufacturing base (MoSPI, 2022). Government initiatives such as Make in India, Production
Linked Incentive (PLI) schemes, and infrastructure modernisation have further strengthened the
country’s industrial competitiveness (IBEF, 2024).
India’s industrial sector is not only a critical engine of domestic economic growth, but also
increasingly embedded in global supply chains across automotive, electronics, pharmaceuticals,
and textiles sectors. As global economies accelerate their transition to Net Zero, the next phase
of industrial development will be defined by innovation, low-carbon transition, and efficient use
of resources.
This presents a dual opportunity for Indian industry: (i) to expand its global economic footprint
while leading the transition to sustainable, resource-efficient industrial practices, (ii) rising global
demand for low-carbon products, circular economy models, and green technologies offers
strong incentives to adopt clean energy, invest in green manufacturing to enhance efficiency.
With the right policy alignment and institutional support, India can emerge as a global leader
of the green industrial revolution, building an economy that is competitive, environmentally
responsible, and aligned with the long-term sustainability goals.
This chapter is structured in three segments. The first segment situates Indian industry in the
global context, outlining its economic contribution, production trends, and emissions footprint.
The second segment presents detailed sectoral deep dives across key industrial sub-sectors.
The final segment explores the major decarbonisation levers shaping the industry’s transition
toward a low-carbon future.
2.1 INDIAN INDUSTRY AND GLOBAL CONTEXT
Globally, industry contributed about 27% to GDP and employed 24% of the workforce in 2021
(World Bank, 2023; 2025) (see Figure 2.1). In the same year, China stood out with 38% of its
GDP and 32% of employment attributed to industry, while South Korea and Japan also reported
higher than the world average contributions of the industrial sector to their economies. In
comparison, in the US and the EU, about 18–22% of GDP and 19–25% of employment came Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 9
Landscape of the Industry Sector in India
from industries (World Bank, 2025). In India, the industrial sector contributed 27% to its Gross
Value Added (GVA) and employed about 24% of the workforce in 2021 (MoSPI, 2025; World
Bank, 2023). Within this, manufacturing accounted for 56.2%, construction 27.3%, utilities 10%,
and mining and quarrying 6.5% (MoSPI, 2025).
0
5
10
15
20
25
30
35
40
45
50
2013 2015 2017 2019 2021
% of total GVA
China
Korea, Rep.
Japan
World
India
European Union
United States
Figure 2.1: Industry (including construction), value added (% of total GVA)
Source: (World Bank, 2023)
2.1.1 Industrial Output: Sectoral Strengths
India is steadily emerging as a key player in global industrial production, especially in the
steel, cement, aluminium and chemical sectors. These industries form the backbone of India’s
manufacturing economy, significantly contributing to GDP and exports (WSA, 2024; IBEF, 2025).
India is currently the world’s sixth-largest chemicals producer and ranks second after China in
steel, cement and aluminium output, accounting for nearly 6% of aluminium, 8% of steel and
over 10% of cement supply globally (WSA, 2024; GCCA & TERI, 2025).
India’s advantages lie in cost-efficient labour, abundant raw materials, and strong domestic
demand driven by urbanisation and infrastructure development. Pharmaceutical exports,
especially generics have underpinned growth in the chemicals sector. Foreign Direct Investment
(FDI) attracted under the Make in India initiative has further strengthened capacity across these
areas (Sharma, 2024).
India experienced significant growth in industrial production between 2000 and 2020 (Figures
2.2 and 2.3). While China remained dominant, producing 61% of steel, 57% of aluminium, 52%
of cement, and 45% of chemicals globally (WEF, 2023), India’s production grew steadily even
as output in G7 countries plateaued (OECD, 2022). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 10
Landscape of the Industry Sector in India
4000
3000
2000
1000
0
Production (Mt)
2000 2010
Steel
2020 2000 2010
Cement
2020 2000 2010
Primary chemicals
2020
G7
China India ROW
Figure 2.2: Materials production of G7 members in the context of global production
(million tonnes)
Source: (IEA, 2022)
Note: ROW = Rest of the World;
The total production of ammonia, methanol, ethylene, propylene, benzene, toluene and mixed xylenes.
70
60
50
40
30
20
10
0
Million Tonnes
200020102020
G7
China India ROW
Figure 2.3: Aluminium production of G7 members in the context of global production
(million tonnes)
Note: ROW = Rest of the World;
Source: (IEA, 2022); (IAI, 2024; NITI Aayog, 2023);
(IAI, 2025)
Looking ahead, the global demand for steel, cement, aluminium and chemicals is projected to
increase by 12-30% by 2050, largely from emerging markets (IEA, 2021). India has a strategic
opportunity to scale sustainably and enhance its role in global value chains. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 11
Landscape of the Industry Sector in India
2.1.2 Energy and Emissions Profile
The industrial sector is a major source of greenhouse gas (GHG) emissions. In 2023, it accounted
for 21.54% of global direct emissions from energy use and industrial processes, with steel, cement,
and chemicals comprising nearly 71% of this (UNIDO, 2024) (see Figure 2.4 and Table 2.1).
Table 2.1: Global and industrial GHG emissions (million tonnes of CO
2
equivalent)
1990 1995 2000 2005 2010 2015 2020 2023
Industry 5974 6215 6404 8097 9746 10483 11026 11408
Global Total32726 33930 36175 41296 45814 48808 49327 52962
Share of
Industry
18.26% 18.32% 17.70% 19.61% 21.27% 21.48% 22.35% 21.54%
Source: (UNIDO, 2024)
India’s industrial emissions profile reflects high material intensity. Roughly 67% of emissions
were from energy use and the balance from processes (MoEFCC, 2024).
29%
27%
15%
29%
Iron and steel
Chemicals and petrochemicals
Cement and lime
Other industrial sectors
Figure 2.4: Contribution of industry sub-sector emissions in 2022 (Globally)
Source: (UNIDO, 2024)
Heavy industries, particularly steel, chemicals, cement, non-ferrous metals, and paper account
for the vast majority of industrial energy use. As India’s economy grows, both output and
energy use are expected to rise substantially. Global forecasts estimate that industrial energy
demand could more than double by 2050, especially in emerging economies (US EIA, 2021).
Managing this growth while cutting emissions is crucial for India’s low-carbon pathway. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 12
Landscape of the Industry Sector in India
2.1.3 Lessons from Global Industrial Trends
India’s trajectory parallels global trends in which countries are simultaneously pursuing industrial
growth, technology upgrades, and emissions reductions, as detailed below:
European Union: Industry remains a top emitter even though emissions fell 29%
from 1990 to 2022 (Eurostat, 2025). Tools like the Emissions Trading Scheme (ETS),
Carbon Border Adjustment Mechanism (CBAM), and Renewable Energy Directive
(RED) are implemented to drive low-carbon transition.
United States: Industrial policy emphasises reshoring and manufacturing investment.
While the Inflation Reduction Act (IRA), Bipartisan Infrastructure Law (BIL), and CHIPS
Act previously allocated significant funds, President Trump’s 2025 administration
has sought to repeal IRA climate provisions and redirect CHIPS subsidies toward
domestic semiconductor production over green industrial decarbonisation (Carlsen
& Gangotra, 2024).
Japan: Focuses on high-tech and automotive sectors. The 2021 Green Growth
Strategy and USD 110 billion (15 trillion yen) Green Innovation Fund support research
and development (R&D) in hydrogen, carbon recycling, and energy storage (JETRO,
2024).
South Korea: With manufacturing at 39% of GDP in 2017, Korea emphasises energy
efficiency, circular economy, and smart factories. Its low-carbon roadmap features
CCUS and Industry 4.0 (Government of the Republic of Korea, 2020).
India shares the global industrial challenges of rising energy demand, emissions intensity, and
green technology integration. But it also holds a distinct opportunity to shape its transformation
early by leveraging PLI schemes and transition platforms to achieve sustainable competitiveness.
2.2 SECTORAL DEEP DIVES: INDUSTRY IN THE INDIAN AND GLOBAL
CONTEXT
This section gives details for the selected sectors, India’s comparative position with global
averages and other countries in terms of production, consumption, per capita consumption,
emissions and sectoral policies for key sectors including steel, cement, aluminium, fertiliser, and
textiles. Less energy intensive sectors like paper and pulp, chlor-alkali, ethylene, refineries, and
MSMEs, are discussed in the Indian context.
2.2.1 Steel sector
Global Context
The global steel industry has expanded rapidly over the past few decades, led by China and
India. Global crude steel production rose from 770 million tonnes (Mt) in 1990 to 1,892 Mt
in 2023 (WSA, 2024) (see Figure 2.5). The Blast Furnace, Basic Oxygen Furnace (BF–BOF)
and Electric Arc Furnace (EAF) processes account for approximately 71% and 29% of global
production, respectively (WSA 2024). The top five producers are China, India, Japan, the USA,
and Russia. Future growth is expected from emerging economies in Africa, South and East Asia,
including India, and Latin America, as demand plateaus or declines in regions such as Europe,
Japan, the USA, and South Korea (WSA, 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 13
Landscape of the Industry Sector in India
Production /Consumption (Mt)
1200
1000
800
600
400
200
0
China
1019
896
141
133
87
53
90 76
45
67
55
3528 3438 32
24
31
20
81
South
Korea
TurkeyUnited
States
Russia GermanyBrazilIndia JapanIran
Production
Consumption
Figure 2.5: Global comparison of steel production and consumption (million tonnes)
Source: (World Steel, 2024) (WEF, 2022) (Hasanbeigi, 2022), For India, Source: (MoS, 2025)
Steel Sector in India
India is the world’s second-largest crude steel producer, with output rising to 152.18 Mt in FY
2024–25 (Ministry of Steel; WSA, 2025). Under the National Steel Policy (NSP) 2017, India targets
a steelmaking capacity of 300 Mt and production of 255 Mt by FY 2030–31, underscoring the
sector’s central role in supporting economic growth.
Finished steel consumption has grown strongly, expanding at a CAGR of 7.6% from around
31 Mt in 2002–03 to about 152 Mt in 2024–25, driven by rapid urbanisation and infrastructure
development. Despite this growth, per capita finished steel consumption in India remains
modest at about 98 kg in 2023–24 (rising to 102.6 kg in 2024–25), less than half the global
average of around 215–220 kg, indicating substantial headroom for future demand as incomes
and investment increase. Steel demand is concentrated in construction (43%) and infrastructure
(25%), followed by engineering and packaging (22%), automobiles (9%), and defence (1%). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 14
Landscape of the Industry Sector in India
160
140
120
100
80
60
40
20
0
BOF EAF IF
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Finished steel consumption
Figure 2.6: Historical production and consumption of steel (million tonnes) (MoS, 2024)
*Steel production route/processes:
BOF: Basic Oxygen Furnace,
EAF: Electric Arc Furnace
IF: Induction Furnace
*Steel Production and Consumption (Milion Tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 15
Landscape of the Industry Sector in India
2023-24
BF
79.70
BOF
61.61
Coal
DRI
41.8
IF
51.1
EAF
31.6
Scrap
33.36
Gas DRI
9.8
62.68
17.03
4.53
6.20
23.04
4.40
9.79
37.19
Million Tonnes, Iron
Million tonnes Steel
Figure 2.7: Technology-wise steel production, 2023-24 (MoS, 2024)
Indian steel production relies on a mix of technologies. The primary routes are: Blast Furnace–
Basic Oxygen Furnace (BF-BOF; the dominant route), Direct-Reduced Iron (DRI) with Electric
Arc Furnace (DRI–EAF; using gas or coal-based reduction), and DRI with Induction Furnace
(DRI–IF; coal-based) (Figure 2.7). A significant contribution of crude steel is from coal based
DRI which is responsible for India’s higher steel sector emission intensity of approximately 2.54
tonnes CO
2
per tonne of crude steel (tCO
2
/tCS), compared to the global average of 1.9 tCO
2
/
tCS in FY 2023-24 (IEEFA & JMK Research 2023).
This diverse mix spans from large integrated plants to small secondary steel mills. These
technology choices also shape energy consumption. For example, the BF-BOF route, which
dominates India’s steel production, averages 27.3 GJ/tonne, substantially higher than global
best practice (20–22 GJ/t). Conversely, scrap-based EAF steel is significantly more efficient at
just 1.4 GJ/t, reflecting alignment with circular economy principles but constrained by scrap
availability (21% share of total production in 2024) (Ministry of Steel, 2024). These contrasts
are evident in the technology/fuel-wise Specific Energy Consumption (SEC) (see Figure 2.8). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 16
Landscape of the Industry Sector in India
30
25
20
15
10
5
0
BF-BOF Coal-based
DRI-EAF
Gas-based
DRI-EAF
Coal-based
DRI-IF
100% scrap
EAF
Hydrogen-based
DRI-EAF
GJ/tonne
Grid electricity Fuel oil GH
2
Non-coking coalGasCoking coal
Figure 2.8: Estimated fuel-wise specific energy consumption
1
The total energy consumed in 2020 and 2025 is 48 Mtoe and 68.8 Mtoe, respectively, accounting
for electricity generation from captive power plants rather than associated fuel consumption.
The detailed fuel mix for 2020 is given in Figure 2.9.
0.65, 1%
1.70, 4%
5.39,
11%
40.57,
84%
Grid electricityCaptive ElectricityGasCoal
Figure 2.9: Energy m ix (Mtoe, %) in steel sector in 2020
To address the steel sector’s low-carbon transition challenges, India is exploring green
Hydrogen as a low-emission pathway for steel. Steelmaking is a global priority for green
hydrogen deployment, with over 200 hydrogen-based projects announced by 2030 (Clean
Energy Ministerial, 2024). India’s National Green Hydrogen Mission targets 5 Mt of annual green
hydrogen production by 2030 (MNRE 2024), with INR 455 crore allocated to pilot hydrogen-
based steelmaking projects (PIB, 2024).
1 Estimated based on the mix of grid electricity and fuel required for the thermal energy and captive electricity for
different technology type. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 17
Landscape of the Industry Sector in India
Key Policies and Initiatives for the Steel Sector
Global PoliciesIndian Policies
Global steel policy is increasingly
shaped by carbon pricing, clean
tech funding, and material efficiency
or circular economy mandates.
The EU ETS applies carbon pricing
to steel producers, while CBAM
imposes tariffs on imported high-
emission steel (ICAP, 2024).
In the United States, the Inflation
Reduction Act (IRA) allocates
substantial funding to support
clean technology initiatives within
the steel industry, promoting the
adoption of low-carbon production
methods (Phadnis, 2024).
Korea steel decarbonisation policies
focus on broad aspects of steel
sector decarbonisation, including
advancing low-carbon technologies
such as Hydrogen-reduction, CCS,
EAF and Steel Scrap; developing
high-value added materials;
enhancing export competitiveness
(InfluenceMap, 2025).
The Clean Steel Partnership, officially
launched in June 2021, seeks to
advance various breakthrough
technologies to produce clean
steel on a large scale by 2030 (EU,
2022). Collectively, these policies
aim to enhance sustainability in the
global steel sector.
Initiatives like the World Steel
Association’s roadmap and global
buyer-led initiatives such as the First
Movers Coalition are reinforcing
demand for green steel.
The National Steel Policy (NSP), 2017
envisions a globally competitive and self-
reliant steel industry. It targets per capita
consumption of 160 kg by 2030–31, aims
to meet domestic demand for high-grade
automotive, electrical, and special steels,
and seeks to reduce coking coal import
dependence from ~85% to ~65%. The policy
further emphasizes expanding global
presence in value-added steel, promoting
energy-efficient and environmentally
sustainable production, ensuring cost-
effective and quality manufacturing, and
achieving global standards in safety, health,
and carbon footprint reduction.
The Steel Research Technology Mission of
India (SRTMI) is a joint initiative of the Indian
steel industry and academia supported by
the Ministry of Steel, to drive innovation
and research in the steel sector and bridge
gaps between industry and academia for
enhanced R&D.
A Green Steel Taxonomy was introduced
with 3-star, 4-star, and 5-star ratings based
on CO₂ intensity (MoS, 2024).
Certifications like LEED (Leadership in
Energy and Environmental Design) and
GRIHA (Green Rating for Integrated Habitat
Assessment) encourage the use of energy-
efficient, low-emission steel in infrastructure
and real estate projects.
The Steel Scrap Recycling Policy (2019)
and Vehicle Scrappage Policy (2022) aim
to enhance scrap availability (IEA, 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 18
Landscape of the Industry Sector in India
Global PoliciesIndian Policies
Countries such as China, Germany,
India, Japan, and Korea have created
policies on circular economy and
material efficiency to boost scrap
availability (OECD, 2024). Under the National Green Hydrogen
Mission, a budgetary support of ₹455 crore
has been allocated to the Ministry of Steel
for implementation of pilot projects for the
use of hydrogen in the iron and steel sector
up to the financial year 2029–30 (NGHM,
MNRE). Under the Mission, Ministry of Steel
has awarded pilot projects in key focus
areas i.e., use of hydrogen in existing Blast
Furnace to reduce coal/coke consumption;
and injection of hydrogen in vertical shaft
based DRI making to partially substitute the
NG/other reducing gas Greening the Steel
Sector in India: Roadmap & Action Plan is
key policy framework issued by Ministry
of Steel (MoS) to guide sector’s transition
towards low-carbon intensity, including
energy efficiency, use of renewable energy
and green hydrogen, material efficiency,
technology shift from coal-based DRI to
cleaner route and CCUS.
Box-1: HYBRIT – Sweden’s Shift Towards Fossil-Free Steel with
Hydrogen
1,2
Green hydrogen is emerging as a key option for reducing emissions in the steel industry.
Sweden is one of the first countries to take large-scale action through the HYBRIT (Hydrogen
Breakthrough Ironmaking Technology) initiative. Under this initiative, three major companies,
SSAB, LKAB, and Vattenfall, are working together to change the Swedish iron and steel
industry by replacing coal with fossil-free hydrogen in the steelmaking process. As part of
this effort, they are also developing large-scale storage systems for fossil-free hydrogen
gas. The HYBRIT initiative has already produced trial batches of fossil-free steel and is seen
as among the earliest realistic steps towards commercial hydrogen-based steel production.
India is exploring similar solutions. While the steel sector in India still relies on blast furnaces,
some pilot projects for hydrogen-based steelmaking have started. For example, Tata Steel
has conducted a trial to inject hydrogen into its blast furnace as a partial replacement
for coal. This marks an early step in India’s move toward low-carbon steel using green
hydrogen.
1 https://www.hybritdevelopment.se/en/
2 Tata Steel Press Release Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 19
Landscape of the Industry Sector in India
Box-2: Clean Steel Partnership (ESTEP 2024)
The Clean Steel Partnership (CSP) was launched in 2021 to help achieve the EU’s
climate neutrality target by 2050. Its main objective is to cut CO
2
emissions from steel
production by 80–95%, with a 50% reduction by 2030. The CSP operates under the
European Green Deal through a public-private partnership. Funding comes from public
sources like Horizon Europe and private industry contributions, aiming to mobilize Euro
2.6 billion (INR 23,400 crore), including Euro 1 billion (INR 9,000 crore) from public
funds. It focuses on advancing clean steel technologies, including hydrogen-based
steelmaking, Carbon Direct Avoidance (CDA), and Carbon Capture and Usage (CCU),
to Technology Readiness Level (TRL) 8. The funding supports demonstration projects
and deployment. Over 100 stakeholders are involved, including EUROFER, ESTEP, and
leading European steelmakers.
Box-3: Carbon Border Adjustment Mechanism (CBAM) (European Union,
2023)
The European Union’s Carbon Border Adjustment Mechanism (CBAM), introduced on
October 1, 2023, imposes levies on imports of carbon-intensive goods such as steel,
aluminium, and fertilisers based on their embedded CO
2
emissions. This mechanism
aims to prevent ‘carbon leakage’ by ensuring that imported products are subject to the
same carbon costs as those produced within the EU.
Key Features:
Transitional Phase (2023–2025): Importers must report the embedded emissions
of covered goods without financial obligations.
Full Implementation (from 2026): Importers will be required to purchase CBAM
certificates corresponding to the carbon price that would have been paid if the
goods were produced under the EU’s Emissions Trading System.
Implications for India (CSEP 2025):
Trade Impact: As a significant exporter of steel and aluminium to the EU, Indian
steel’s cost may increase, potentially affecting its competitiveness.
Compliance Challenges: Indian exporters will need to develop robust mechanisms
for measuring and reporting the carbon content of their products to comply
with CBAM requirements.
Strategic Considerations: India may need to enhance its domestic carbon pricing
mechanisms and invest in low-carbon technologies to maintain market access
and competitiveness in the EU.
CBAM represents a significant shift in global trade dynamics, linking carbon emissions
directly to trade policies. For India, proactive engagement and policy adjustments will
be crucial to navigate the consequent challenges and opportunities. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 20
Landscape of the Industry Sector in India
2.2.2 Cement Sector
Global Context
The cement industry accounts for 13% of global GDP and 8% of global emissions (GCCA & TERI,
2025). With 68% of the global population projected to live in urban areas by 2050, cement
demand will be driven by South and Southeast Asia, Africa, the Middle East, and Latin America
(UN DESA, 2018). China currently produces about half of the world’s cement, followed by India
(see Figure 2.10). India’s per capita cement consumption is approximately 257 kg, less than
half the global average of about 540 kg (GCCA and TERI, 2025), indicating significant growth
potential.
Globally, the cement sector was the third-largest industrial energy consumer in 2022, using 12
Exa Joules (3,333 TWh) or 7.18% of industrial energy (IEEFA & JMK Research, 2023). Around 50-
60% cement production emissions are generated from limestone during the calcination process,
30-40% are from fossil fuel combustion, and the remaining approximately 10% from electricity
use in grinding, material handling, and plant operations. Indian cement plants are relatively
energy-efficient due to early adoption of technologies such as high-efficiency kilns, waste heat
recovery systems, and clinker substitution using supplementary cementitious materials (SCMs)
like fly ash and slag (CEEW, 2023).
2500
2000
1500
1000
500
0
ChinaTurkey Iran BrazilIndonesiaRussia Saudi
Arabia
United
States
IndiaVietnam
ProductionConsumption
Production /Consumption (Mt)
2023
2020
391
375
120
57
107
82
65
69
61
6662 6764 6365 49
47
90
Figure 2.10: Global comparison of cement production, consumption, emissions,
and per capita consumption (million tonnes)
Source: (Worldpopulationreview, 2023) (USGS, Cement - United States Geological Survey 2023, 2023) (USGS, Cement
- United States Geological Survey 2023, 2023) (EUCementAssociation, 2023), For India, Source: (India Climate &
Energy Dashboard) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 21
Landscape of the Industry Sector in India
Cement Sector in India
India is the world’s second-largest cement producer, accounting for over 8% of global installed
capacity and annual output reaching 453 million tonnes in FY25, largely under private ownership,
reflecting a mature, competitive industry (IBEF, 2025). Cement and its products contributed to
0.88% of India’s GDP in 2023-24 (MoSPI, 2025; RBI, 2025). The sector is the fifth-largest contributor
to the Indian economy and supports infrastructure, employment, and socio-economic growth.
It provides one million direct jobs and supports another 20,000 downstream jobs per million
tonnes of cement produced and consumed (CMA, 2022). Rapid urbanisation and government-led
infrastructure initiatives such as PM Awas Yojana–Gramin (PMAY-G), PM Gati Shakti, and Smart
Cities are driving cement demand. As shown in Figure 2.11, from FY 2019 to 2024, domestic
demand grew at about 6% CAGR, recovering strongly after the COVID-19 pandemic with 8%
growth in FY 2022 and about 9% in FY 2023 (MOSPI, 2025). By FY 2024, infrastructure became
the key growth driver, and the momentum is expected to continue through initiatives like Ude
Desh ka Aam Naagrik (UDAN) scheme for regional airport expansion, and ongoing National
Highway and Bharatmala road development projects (Ministry of Finance, 2025).
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
450
400
350
300
250
200
150
100
50
0
Million Tonne
Figure 2.11: Historical production of cement (million tonnes)
On the technology and product mix, nearly 99% of India’s cement is produced using the dry
process with preheater–precalciner kilns, which is significantly more energy efficient than older
wet processes. Blended cements dominate production, with Portland Pozzolana Cement (PPC)
and Portland Slag Cement (PSC) accounting for about 72% of total output (of which PPC alone
accounts for 65%), while Ordinary Portland Cement (OPC) constitutes around 27%. Emerging
low-clinker cements such as Limestone Calcined Clay Cement (LC3) and Portland Limestone
Cement (PLC) are gradually entering the market (Cement Manufacturers Association). The
extensive use of supplementary cementitious materials (such as fly ash and slag, etc.) have
reduced the clinker-to-cement ratio to 0.67 by 2024, better than the global average (0.76),
thereby lowering the sector’s carbon intensity (WRI, 2024).
The cement industry is both energy-intensive and process-intensive, and was responsible for
emissions of approximately 179 MtCO₂e in 2019 (MoEFCC, 2023) and 296 MtCO₂e in 2025 (estimated). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 22
Landscape of the Industry Sector in India
The cement sector consumes around 690-710 kcal/kg (~3.1 GJ/t) of thermal energy and 50
kWh/tonne of electricity for clinker production and 70-80 kWh/tonne of electricity for final
cement production. Operating among the most energy-efficient cement industries globally, the
sector reflects widespread adoption of modern kilns, waste-heat recovery systems, and efficient
operational practices (Confederation of Indian Industry, 2025). The overall energy consumption,
accounting for electricity generation from captive power plants rather than associated fuel
consumption, remains at 18 and 27 Mtoe in 2020 and 2025, respectively, with electricity
contributing about 12% of the energy demand (see Figure 2.12).
Grid electricity Captive ElectricityCoal Pet-cokeBiomass
5.38
30%
0.32, 2%
0.36, 2%
10.21,
57%
1.73,
9%
Figure 2.12: Energy mix (Mtoe, %) in cement sector in 2020
While India’s cement sector is among the most energy-efficient globally, the dominance of
coal and pet coke persists with limited use of alternative fuels (mainly from biomass, industrial
wastes, and Refuse-Derived Fuel (RDF)).
India is also advancing low-carbon cement alternatives. Blended cements such as Portland
Composite Cement (PCC), Portland Limestone Cement (PLC), Portland Dolomitic Limestone
Cement (PDC), Limestone Calcined Clay Cement (LC3), and other multicomponent blends are
in various development stages (GCCA & TERI 2025). Emerging options like Geopolymer and
Super Sulphated Cement require further research and standards. LC3, in particular, is gaining
traction domestically and internationally, and a BIS standard (IS 18189:2023) was introduced
in June 2023 to support its uptake. Its commercial production plants in Europe are expected
to commence by 2025 (RMI, 2023). Major cement producers have also invested significantly
in renewables and waste heat recovery, adding about 600 MW of renewable capacity in the
past decade. India is also taking early steps toward integrating carbon capture, utilisation, and
storage (CCUS) in cement production as part of its long-term low-carbon transition strategies
(JSW Cement 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 23
Landscape of the Industry Sector in India
Box-4: Limestone Calcined Clay Cement (LC3) is a promising low carbon
substitute both in terms of raw material availability and process maturity
Typical Composition of LC3
2
Around 50-60% of emissions in the cement industry come
from clinker production. To reduce this, it is important to bring
down the clinker content in cement. Limestone Calcined Clay
Cement (LC3) cement does exactly that, it brings the clinker
ratio down to about 50%, compared to OPC which typically
has clinker content of around 90-95%. LC3 technology
has been scaled up in parts of Africa and South America,
mainly to reduce clinker imports. India could benefit from
such initiatives as it works to reduce its emissions. India has
enough raw material to support this shift. As of 2015, clay
and limestone reserves stood at 9,294 million tonnes and
16,000 million tonnes respectively (LC3 EPFL, 2024; TERI).
Key Policies and Initiatives for the Cement Sector
As a developing country and among the fastest-growing economies, India has robust cement
demand and long-term potential from infrastructure development (GCCA India & TERI, 2025).
Low-carbon transition policies for the cement sector include clinker substitution, blended cement,
alternative fuels, material and energy efficiency measures, and CCUS. The decarbonisation of
other sectors—power and buildings—also has a major impact on cement sector decarbonisation
(GCCA India & TERI, 2025). Policies promoting low-carbon cement like LC3 reflect India’s
commitment to decarbonise the sector.
Global PoliciesIndian Policies
Global cement policy is increasingly
shaped by carbon pricing, product
standards, and carbon capture
mandates.
The EU Emissions Trading System (EU
ETS) applies carbon pricing to cement
producers, while the EU’s Carbon
Border Adjustment Mechanism (CBAM)
covers cement imports from 2026,
discouraging high-emission production
(ICAP, 2024; EC, 2023).
The Greenhouse Gas Emission Intensity
Target Rules (2025) impose India’s first
legally binding CO₂ intensity targets
on cement plants, requiring reductions
per tonne of output under the Carbon
Credit Trading Scheme (MoP, 2025).
The BIS standard IS 18189:2023
supports LC3 cement, enabling about
30% emissions reduction (BIS, 2023).
2 TARA: Environmental and Resource Assessment for Uptake of LC3 in India’s Cement Mix
Clinker
Calcined clay
Low-grade Limestone
Gypsum
50%
30%
15%
5% Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 24
Landscape of the Industry Sector in India
Global PoliciesIndian Policies
Ireland mandates 30% clinker
substitution in all publicly funded
projects (Kumar, 2025).
The US Buy Clean Initiative (2021)
mandates low-carbon cement use in
federal projects (Kumar, 2025).
China’s government launched a Carbon
Peak Implementation Plan for Building
Materials (2022) to ensure cement sector
emissions peak before 2030 through low-
carbon technologies, energy efficiency,
and cleaner energy use.
In GCCA 2050 roadmap to Net Zero,
leading companies from Global Cement
and Concrete Association have joined
forces to set a collective goal of achieving
carbon-neutral concrete production by
2050.
The ASEAN Federation of Cement
Manufacturers’(AFCM) plan is the
world’s first regional strategy for cement
to guide the Southeast Asian cement
sector in reducing CO
2
emissions
through expanding low-carbon cement,
use of renewable energy, energy
efficiency and deploying CCUS.
The Fly Ash Utilisation Notification
mandates the use of fly ash from thermal
power plants, strengthening clinker
substitution and circular material use
in cement production (MoEFCC, 2021).
Waste Management Rules legally
enable co-processing of municipal,
hazardous, and plastic waste in cement
kilns, supporting fuel substitution and
emissions reduction (MoEFCC, 2016–
2022).
India’s National Taskforce on Alternative
Fuels and Raw Materials (AFR) aims to
facilitate greater adoption of waste-
derived materials (plastic, tyres and
biomass residues) as fuel and substitute
for coal/limestone in energy-intensive
cement sector (Institute of Industrial
Productivity).
2.2.3 Aluminium sector
Global Context
Aluminium’s light weight, corrosion resistance, and recyclability make it integral to modern
industry, particularly in transport, construction, and electrification. Global aluminium production
increased from 45.9 million tonnes in 2006 to 70.7 million tonnes in 2023 (USGS, 2010; IAI
2024). China remains the dominant player and produced around 42 million tonnes in 2023 (59%
of global output), followed by India, which reached a record capacity of 4.1 million tonnes in
2022–23 (BEE, 2024; SMM China, 2025).
Aluminium is a major economic contributor. Globally, it generates USD 73 billion in direct
output and supports 7.5 million jobs (Energy Transition Commission, 2022). In India, though
consumption remains low, aluminium contributes to 2% of manufacturing GDP and supports
nearly 800,000 jobs (NITI Aayog). However, its expansion poses significant environmental
challenges. The sector emits approximately 1.1 billion tonnes of CO₂ annually, nearly 2% of global
emissions and is projected to rise by 50% by 2050 under business-as-usual scenarios (Energy
Transition Commission, 2022). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 25
Landscape of the Industry Sector in India
As global industries commit to Net Zero targets, the share of recycled aluminium is expected
to rise to 45% by 2030 (WEF, 2023). Leading OEMs aim to use 40–80% recycled aluminium,
driving investments in secondary production and scrap supply chains (FICCI, 2024; Energy
Transition Commission 2023).
Primary producers are also investing in low-carbon aluminium (under 4 tCO₂e/t), prioritising
non-fossil electricity, energy efficiency, and carbon capture technologies. Since 60% of emissions
are generated by electricity use, reducing emissions from power supply through solar, wind,
and increasingly, nuclear power is critical. Small Modular Reactors (SMRs), under development
globally, offer promise as a steady, low-carbon power source for energy-intensive industries.
Box-5: Aluminium Dunkerque (France) –
Leveraging Nuclear Power for Low-Carbon Aluminium
3
Located in France, Aluminium Dunkerque leverages a nuclear-powered grid to
significantly reduce its emissions. This model demonstrates how stable, low-carbon
electricity can enable low-emissions aluminium production.
India’s aluminium producers have adopted prebaked anode technology, replacing older
Söderberg methods to improve efficiency and reduce emissions. Emerging technologies such
as inert anodes, carbochlorination, and carbon capture and storage (CCS) are being explored
to further reduce emissions to as low as 0.2 tCO₂/t.
In parallel, there is a growing focus on Scope 3 emissions
4
across the aluminium value chain.
Automakers and construction firms are aligning with global targets to cut emissions by 25–100%
by 2030 reinforcing the need for cleaner supply chains and circular material flows.
Aluminium Sector in India
India is the world’s second-largest producer of primary aluminium, with an output of
approximately 4.2 million tonnes in 2024. However, domestic consumption at 3-4 kg per capita
per year is lower than the global average of 11-13 kg and China’s consumption of over 25-
30 kg (Ministry of Mines, 2025). Demand is expected to grow rapidly due to expansion in
infrastructure, power, transport, packaging and manufacturing activities. The aluminium industry
contributes to roughly 2% of India’s manufacturing GDP and supports nearly 0.8 million direct
and indirect jobs (Kumar, 2025). India’s aluminium market is dominated by primary production
(70–75%). Secondary (recycled) aluminium is only 25–30% of total output (Figure 2.13), lower
than the global average of 40%. Due to low domestic scrap availability, 85-90% of scrap used
in India is imported (Ministry of Mines, 2025).
3 Pioneering Sustainable Aluminium: Aluminium Dunkerque’s Decarbonisation and Partnership Strategy
4 Scope 3 emissions are the indirect GHG emissions that come from a company’s supplier value chain Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 26
Landscape of the Industry Sector in India
Million Tonne
6
5
4
3
2
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
ScrapAluminium Production
Figure 2.13: Historical production of aluminium (million tonnes)
Aluminium production is one of the most energy-intensive processes. Indian primary smelters
consume an average of 20-28 GJ/t of thermal energy (mainly for alumina refining and anode
baking), and 50-51 GJ/t of electricity (for aluminium smelting), totalling around 70-80 GJ/t (≈
1.68 toe/t), higher than the global best practice of 63–65 GJ/t (Sripathy, et.al., 2024). In contrast,
secondary aluminium production requires only 10-10.8 GJ/t (2.8-3 kWh/t), roughly 15% of the
energy of primary smelting, underscoring the critical role of recycling in low-carbon transition
(Raabe et. Al, 2022). The sector’s total final energy consumption was around 6.4 Mtoe in 2020
(Figure 2.14), including both thermal energy and electricity. When fuel consumption for captive
electricity generation is included, the total energy use amounts to 14.38 Mtoe in 2020. The fuel
mix is coal-dominated, with minimal use of RE integration in electricity generation so far.
1.74,
27%
1.12,
17%
3.6,
56%
Grid electricity
Captive Electricity
Thermal Coal
Figure 2.14: Energy mix (Mtoe, %) in aluminium sector in 2020 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 27
Landscape of the Industry Sector in India
This is because aluminium smelting requires continuous, high-reliability power, leading to long-
term reliance on captive coal-based generation amid limited availability of firm renewable
alternatives. Sectoral emissions are projected to be about 135 MtCO₂e in 2025 (around 3.3%
of India’s total GHG emissions). Emission intensity is estimated at 23.5 tCO₂ per tonne, well
above the global average of 16 tCO₂/t. Around 57% of these emissions arise from energy
use, predominantly captive coal power, while the remainder comes from process emissions
associated with carbon anode consumption and Perfluorocarbons (PFCs) releases (CF₄, C₂F₆).
India’s aluminium sector exhibits comparatively high CO₂ intensity, making it a strong candidate
for rapid decarbonisation through clean power procurement, expanded recycling, and the
deployment of inert anode and CCUS technologies, in alignment with India’s long-term Net
Zero objectives.
Key Policies and Initiatives for the Aluminium Sector
The aluminium industry is highly energy-intensive, consuming an average of 14,361 kWh of
electricity per tonne of aluminium produced. Recognising the environmental and energy
challenges associated with producing primary aluminium, India has introduced measures to
enhance scrap recycling to produce secondary aluminium, which uses just 5% of the energy
used in primary aluminium production. In addition, the PAT scheme has driven significant energy
efficiency improvements in the aluminium industry, achieving cumulative energy savings of 2.13
million tonnes of oil equivalent (Mtoe) (BUR 4 Report 2024).
Global PoliciesIndian Policies
The EU’s Carbon Border Adjustment
Mechanism will apply to aluminium
from 2026, levying carbon costs on
imported aluminium.
China included Aluminium in its
national Emissions Trading System in
2024 (as the source of ~60% of global
aluminium) (IEA)
Major producers are piloting
breakthrough technologies – e.g.
inert anode smelting (Canada’s Elysis
project) and electrified alumina refining
– alongside carbon capture to achieve
near-zero-emission primary aluminium.
The Non-Ferrous Metal Scrap Recycling
Framework promotes circularity and
secondary production (PIB, 2025).
The Greenhouse Gas Emission Intensity
Target Rules (2025) impose legally
binding CO₂ intensity reduction targets
on aluminium producers from 2025,
requiring a 2.8%-7.1% reduction in CO
2
per tonne under CCTS (MoP, 2025).
Electricity regulations, including open
access provisions and Renewable
Purchase Obligations (RPOs),
increasingly affect aluminium smelters,
given their high dependence on power
and indirect emissions (MoP; SERCs). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 28
Landscape of the Industry Sector in India
2.2.4 Fertiliser sector
Global Context
The fertiliser industry plays a pivotal role in enhancing agricultural productivity, contributing
significantly to global food security and economic growth. In 2023–24, global fertiliser
production stood at approximately 218 million tonnes. Within fertilisers, urea production reached
approximately 184 million tonnes out of 218 million tonnes of total fertilisers globally, with China
and India contributing around 40% of global urea output. The global fertiliser market, valued at
USD 145 billion in 2023, has grown at a modest 1% annually over the past decade. In contrast,
India’s market, valued at USD 11.32 billion, is projected to grow at a CAGR of 4.2%, reaching
USD 16.58 billion by 2032, driven by rising demand and government subsidies (IBEF, 2024).
Globally, the fertiliser industry contributes to around 1.3% of total CO₂ emissions, and ammonia
production alone consumes 2% of global energy. Enabling low-carbon strategies for the sector
centres on three key pathways: energy efficiency, fuel switching, and green ammonia. Energy
efficiency improvements in urea production can reduce thermal energy demand by up to 10%.
Transitioning to round-the-clock renewable energy (RTC RE) can reduce dependence on coal-
and gas-based captive power. The most promising long-term solution is the adoption of green
ammonia, which addresses nearly 80% of emissions from fertiliser manufacturing (CEEW 2024).
Despite technological improvements, fertiliser production remains highly energy- and emission-
intensive. Ammonia production is the dominant source, accounting for 90% of the sector’s
energy use. The shift from coal to natural gas as the primary feedstock has improved efficiency;
coal usage fell from 2.13 million tonnes in 2016–17 to 0.80 million tonnes in 2023–24. The fertiliser
sector accounts for 31% of India’s total natural gas consumption, driven by urea production,
which increased from 15,429 MMSCM in 2016–17 to 19,400 MMSCM in 2022–23 (BEE, 2024).
Box-6: Scheme Guidelines for implementation of SIGHT Programme
Component II: Incentive for Procurement of Green Ammonia Production (under Mode2A)
of the National Green Hydrogen Mission (NGHM). Mode 2A caters to the requirements
of the fertiliser sector. As per the said Guidelines, the capacity available for bidding
under Tranche I of Mode 2A was 5,50,000 tonnes per annum of Green Ammonia.
Thereafter, Solar Energy Corporation of India (SECI) also issued Request for Selection
(RfS) for selection of Green Ammonia Producers through a cost based competitive
bidding process (Ministry of New and Renewable Energy, 2024).
Fertiliser Sector in India
India ranks as the second-largest consumer and third-largest producer for fertilisers, accounting
for about 20% of global output (CEEW, 2024). In 2023–24, India consumed 60 million tonnes of
fertilisers, including 35.78 million tonnes of urea, 10.97 million tonnes of DAP, 1.64 million tonnes
of MOP, and 11.68 million tonnes of NP/NPK fertilisers. Nutrient use intensity reached 141.2 kg/ha
in 2022–23, with 13 states led by Uttar Pradesh, Maharashtra, and Madhya Pradesh accounting
for 92% of total consumption (FAI 2024). Globally, South Asia and Latin America are expected
to drive fertiliser demand growth through 2027, influenced by climate stress, changing rainfall
patterns, and evolving farming practices (IFASTAT, 2023). By 2023-24, India’s total fertiliser
production reached about 50 million tonnes (Department of Fertiliser, 2025). In 2023-24, India Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 29
Landscape of the Industry Sector in India
imported 17.69 million tonnes of fertilisers, comprising 7.04 million tonnes of urea, 5.56 million
tonnes of DAP, 2.21 million tonnes of NP/NPK, and 2.86 million tonnes of Muriate of Potash
(MOP) (Department of Fertiliser, 2025).
Figure 2.15 shows the historical production trend of major fertiliser production in India
5
. Urea
remains the leading product. Despite its significant production capacity, India remains heavily
import-dependent, particularly for Di-Ammonium Phosphate (DAP), Complex Fertilisers (CFs)
and even urea - due to limited access to key raw materials such as phosphate rock and ammonia.
Urea DAP Complex Fertilisers
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Figure 2.15: Historical production of major fertilisers, (million tonnes)
India’s fertiliser industry is highly emissions-intensive, primarily due to its reliance on grey
hydrogen produced through steam methane reforming of natural gas during ammonia
production. Urea, the most commonly produced fertiliser, requires approximately 0.575 tonnes
of ammonia per tonne produced. DAP and other complex fertilisers consume ammonia to a
lesser extent, at a lower extent of 0.23 tonnes per tonne produced (Baboo, 2015). Ammonia
production and its conversion into fertilisers contribute substantially to GHG emissions, totalling
around 25 million tonnes of CO₂ in 2022–23, 65% of which is attributed to urea alone (Patidar
et. al, 2024). Natural gas is used as both a feedstock and a thermal energy source. Given its
significant emissions footprint, the fertiliser sector is a key focus for India’s industrial low-carbon
transition effort.
Figure 2.16 provides the information on the specific energy consumed in different types of
fertilisers. Energy efficiency has gradually improved, as the average Specific Energy Consumption
(SEC) for urea production has reduced to 17.88 GJ/tonne (treating hydrogen as fuel and
accounting for electricity generation from captive power plants rather than associated fuel
consumption).
5 This output is primarily driven by urea, di-ammonium phosphate (DAP) and other complex fertilisers (OCFs), which
together account for about ~85% of the total production, and used for the purpose of this study.
Million Tonne Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 30
Landscape of the Industry Sector in India
20
18
16
14
12
10
8
6
4
2
0
UreaDAPUrea
Urea DAP Complex Fertilisers
Figure 2.16: Estimated fuel-wise specific energy consumption of major Fertilisers
Key Policies and Initiatives for the Fertiliser Sector
Global PoliciesIndian Policies
Global fertiliser policy is increasingly
shaped by decarbonisation and clean
hydrogen, as nitrogen fertilisers account
for nearly 5% of global GHG emissions
(IEA, 2023).
The EU’s Carbon Border Adjustment
Mechanism (CBAM) covers fertilisers
such as ammonia and nitric acid,
applying carbon costs on high-emission
imports from 2026 (EC, 2023).
Countries are supporting green ammonia
through clean hydrogen policies,
initiatives such as Germany’s H
2
Global
and the U.S. Inflation Reduction Act
are accelerating low-carbon fertiliser
production (BMWK, 2023; US DOE,
2022).
Global initiatives like the Global Fertiliser
Challenge launched at COP27 promote
efficient fertiliser use and low-emission
alternatives to strengthen food security
while reducing emissions (US State
Department, 2022).
The Urea Policy (2015) and the Perform,
Achieve and Trade (PAT) scheme
have driven energy efficiency in urea
production, delivering ~0.78 Mtoe energy
savings in PAT Cycle 1 (BEE, 2017).
The National Green Hydrogen Mission
prioritises fertiliser production for green
hydrogen and green ammonia adoption,
supporting pilot projects and future
blending mandates (MNRE, 2023).
The PM-PRANAM scheme incentivises
states to reduce chemical fertiliser
consumption by sharing 50% of subsidy
savings to promote organic and bio-
fertilisers (PIB, 2023).
Mandates such as Neem-Coated Urea
and the promotion of nano-fertilisers
aim to improve nutrient-use efficiency
and reduce emissions from fertiliser use
(MoC&F, 2015; IFFCO, 2023).
Giga Joules Per Tonnes (GJ/t) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 31
Landscape of the Industry Sector in India
2.2.5 Textile sector
The global textile sector is vital to manufacturing, employment, and trade, employing over 75
million people and contributing USD 2.4 trillion to global manufacturing output. In 2022, fibre
production reached 116 million tonnes, driven largely by the boom in fast fashion. Valued at USD
1.83 trillion in 2023, the industry is projected to grow at a CAGR of 7.4%, reaching USD 3.04
trillion by 2030. Asia dominates global production, with China, Bangladesh, and India together
accounting for over 60% of global textile output (KPMG, 2021).
While textiles serve diverse applications including interior furnishings, automotive components,
agri-textiles, and hygienic materials, clothing remains the primary driver of demand, accounting
for 60% of total fibre consumption. China alone contributed to 35.6% of global textile exports
in 2020, valued at USD 276 billion (Filho et al. 2022). India is the world’s 6th largest exporter
of textiles and apparel, with a 3.91% share in global trade 2023-24. Domestically, the sector
contributes to 2.3% of GDP and 13% of industrial production, underscoring its strategic
importance to the economy (PIB, 2025).
Textile production is highly energy and resource-intensive. Wet processing, including dyeing
and chemical treatments, accounts for nearly 38% of total energy use (Minajigi, S.N., 2019).
Globally, the sector contributed to around 10% of industrial emissions in 2022–23, releasing an
estimated 1.7 billion tonnes of CO₂e (ILO 2022). In India, the sector emitted approximately 45
million tonnes of CO₂ in 2025 (estimated).
Globally, the industry is transitioning towards closed-loop production, CO₂-based waterless
dyeing, and sustainable certifications such as OEKO-TEX, GOTS, and Bluesign. Circular business
models and eco-labelling are becoming central to both brand strategy and regulatory compliance,
reflecting rising consumer awareness and tightening environmental standards (Durand, 2025).
Textile Sector in India
India’s textile and apparel industry is one of the country’s oldest and most significant industrial
sectors, contributing to around 2.3% of GDP and to over 12% of export earnings (PIB, 2025).
It provides direct employment to more than 45 million people, making it the second-largest
employer after agriculture (PIB, 2025). India’s textile market, valued at USD 174 billion in 2023,
is expected to grow at a CAGR of 11.98% to USD 350 billion by 2033, propelled by rising
domestic consumption, growing export demand, and supportive policy initiatives such as the
Production Linked Incentive (PLI) scheme. South and Southeast Asia are projected to remain
the growth centres for global demand, buoyed by low labour costs, expanding e-commerce,
and rising consumer interest in sustainable fabrics like organic cotton and recycled polyester
(Ministry of Textiles, 2024).
With strong policy support, rising domestic demand, and expanding export opportunities, the
industry has grown at an estimated 10.2% CAGR since 2016, positioning India as the world’s
second-largest textile producer and a major participant in global trade (at about 4% share)
(IBEF, 2023; PIB, 2025). However, domestic textile consumption remains low at around 5 kg per
capita annually, compared to the global average of 15 kg, indicating significant growth potential
with rising incomes and urbanisation (Gupta, 2025). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 32
Landscape of the Industry Sector in India
Man-Made FibreNatural Fibres (Cotton)
Million Tonnes
9
8
7
6
5
4
3
2
1
0
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Figure 2.17: Historical production of textile, (million tonnes)
Historically, India’s textile base has been dominated by cotton, with cotton fibre accounting for
75–80% of total fibre consumption in the past. However, a structural shift toward man-made
fibres (MMFs) such as polyester, viscose, and technical textiles is underway. By 2022–23, MMFs
made up about 27% of domestic fibre output, up from 19% in 2016–17, reflecting diversification
toward more durable, affordable, and performance-oriented materials. This transition aligns with
global trends, where synthetics account for 72% of fibre consumption. While this shift supports
export competitiveness, it also raises energy and emissions intensity, as MMF production requires
higher energy inputs and dependent on petrochemical feedstocks, in contrast to cotton’s lower
footprint as an agricultural resource (UNCTAD, 2025; IBEF, 2023).
Structurally, the sector is highly fragmented and decentralised, comprising a mix of large
integrated mills and a vast number of MSMEs engaging in spinning, weaving, knitting, dyeing,
and garment manufacturing. Around 95% of fabric production comes from small and informal
units, which account for about 80% of installed capacity located in clusters such as Surat
(synthetics), Tirupur (knitwear), and Ludhiana (woollens) (Gupta, 2020). While this fragmentation
provides broad employment, it also constrains technology modernisation and energy efficiency
upgrades, as smaller enterprises often rely on outdated equipment, automate less, and rely on
fossil-fuel-based heat sources.
The sector’s final energy consumption (accounting for electricity generation from captive power
plants rather than associated fuel consumption) has risen from 6.6 Mtoe in 2020 to 8 Mtoe
in 2025. Among processes, finishing (which includes dyeing, drying, and washing) is the most
energy-intensive stage, consuming about 43% of total energy, of which 73% is met by coal.
Spinning accounts for roughly 24% of energy use, and is largely electricity-driven (72%), while
weaving and knitting together represent around 15% energy consumption, mainly based on
electricity (Vasudha Foundation, 2025). Accordingly, the fuel mix comprises 42% coal, 40% grid
electricity, and 12% biomass (see Figure 2.18). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 33
Landscape of the Industry Sector in India
Grid electricity
Non-coking coal
Captive Electricity
Fuel oil
Biomass
0.79,
12%
0.40,
12%
2.74,
42%
2.12,
32%
0.54,
8%
Figure 2.18: Energy mix (Mtoe, %) in textile sector
Beyond CO₂, textile processing generates substantial wastewater and chemical pollution,
particularly from dyeing operations. Addressing energy efficiency, fuel switching, and cleaner
production technologies will be crucial to ensure sustainable growth as domestic and export
demand continue to rise.
Technological innovation is transforming the industry. Globally, players are adopting Industry
4.0 solutions such as digital printing, AI-enabled quality control, and IoT-driven production
optimisation. India has seen similar progress, particularly among large and export-oriented
enterprises. However, the sector remains largely composed of MSMEs, many of which operate
informally in clusters like Surat, Tiruppur, and Panipat. These units continue to rely on outdated
technologies and manual processes, limiting their productivity and environmental performance.
To address this, the Government of India has launched the National Technical Textiles Mission to
foster innovation and investment in high-performance textiles, including agro-textiles, medical
textiles, and protective gear, positioning India as a global hub for technical textiles (Ministry of
Textiles 2022). Environmental stewardship is also being promoted through targeted schemes. The
Ministry of MSME’s Zero Defect Zero Effect (ZED) certification encourages small manufacturers
to adopt cleaner production and resource-efficient practices (MoMSME). In major clusters like
Tiruppur and Surat, collective mitigation efforts such as Common Effluent Treatment Plants
(CETPs) are supporting compliance with pollution control norms. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 34
Landscape of the Industry Sector in India
Key Policies
The textile industry consumes about 1.2 million tonnes of oil equivalent in energy annually
(Gunturu 2022). Several policies like the PAT scheme were implemented, resulting in 0.33 Mtoe
of energy saved between 2012 and 2022 (BUR 4 Report 2024). A push for renewable energy
adoption is driving further efforts to decarbonise the sector. India is also accelerating sustainable
transformation through flagship initiatives. The PM MITRA scheme establishes integrated textile
parks with common effluent treatment plants and renewable energy supply to reduce the
environmental footprint.
Global PoliciesIndian Policies
EU adopted a Strategy for Sustainable
and Circular Textiles (2022) aimed
at making textiles durable, repairable
and recyclable by 2030 – including
eco-design requirements, minimum
recycled fibre content, and mandatory
Extended Producer Responsibility for
textile manufacturers. Further, the EU
has introduced European Sustainability
Reporting Standards (ESRS) and
Ecodesign for Sustainable Products
Regulation (ESPR) to incentivise
durable and recyclable textiles that
can promote the circular economy
(Alchemie 2024). The Ministry of Textiles has established an
Environmental, Social, and Governance
(ESG) Task Force to guide the sector
toward sustainable practices, including
recycling and resource efficiency
(Outlook 2024).
The National Technical Textile Mission
(NTTM) aims to promote innovation in
high-performance and durable textiles,
supporting sustainability and global
competitiveness. The Textile Policy
2024 aims to modernise the textile
sector, promote sustainability, foster
innovation, and expand India’s presence
in global markets.
California’s Responsible Textile Recovery
Act mandates the recycling of textiles.
France’s Anti-Waste Law for a Circular
Economy (2020) bans the destruction
of unsold clothing.
Several countries have textile labelling
policies (the EU’s Digital Product
Passport), creating demand-side
pressure for sustainable production,
with increasing robustness of standards
to prevent greenwashing.
Green financing from SIDBI and IREDA
enables MSMEs to access capital for
energy-efficient technologies and
renewable energy integration.
Maharashtra government’s Integrated
and Sustainable Textile Industry Policy
(2023-28) (GoM, 2023) offers capital
subsidies to textile units for setting
up solar power projects, promoting
renewable energy adoption within the
industry. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 35
Landscape of the Industry Sector in India
2.2.6 Paper & Pulp
India’s paper and pulp industry plays a vital role in supporting sectors such as education,
publishing, packaging, and sanitation. India is among the top 5 paper-producing countries
globally (CPPRI, 2022). The sector is highly fragmented, comprising large integrated mills,
medium-sized mills, and numerous small units. India has over 900 paper units with an installed
capacity of nearly 29.11 million tonnes, of which around 538 mills are operational with a total
operating capacity of approximately 25.28 million tonnes (CPPRI, 2022). In 2021–22, actual
production was around 22.43 million tonnes (NITI Aayog). As shown, total paper and pulp
output grew at a CAGR of 5.4% between 2010–11 and 2021–22 (Figure 2.19), with production
dominated by Recycled Fibres (RCF)-based mills (75%), followed by Wood-based (19%) and
Agro-based (6%) routes (IPMA).
25
20
15
10
5
0
2010-112014-152018-192012-132016-172020-212011-122015-162019-202013-142017-182021-22
RCF-BasedAgro-BasedWood-Based
CAGR of 5.4%
Million Tonnes
Figure 2.19: Historical production of paper and pulp through different routes
(million tonnes)
With India’s per capita paper consumption (around 16 kg/capita) significantly below the global
average (around 57 kg/capita), the market offers substantial room for expansion. Packaging
paper and board, in particular, have emerged as the fastest-growing segments due to the rise
of online retail and food delivery services. To meet this demand, several mills have expanded
capacities and invested in modern technologies.
However, this growth has also increased pressure on natural resources, especially in terms of
energy, water, and raw materials. The industry is energy- and water-intensive, traditionally reliant
on coal-based captive power and virgin raw materials like wood and agro-residues. In terms of
average energy consumption, wood-based and agro-based paper production consume similar
thermal energy of 27.3 GJ/t, with electrical energy use of 5.22 GJ/t and 4.5 GJ/t, respectively,
while RCF-based production is significantly less energy-intensive, requiring only 11.3 GJ/t of
thermal and 2.61 GJ/t of electrical energy (Figure 2.20) (Shakti Foundation). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 36
Landscape of the Industry Sector in India
RCF-Based
Thermal EnergyElectrical Energy
Agro-BasedWood-BasedSpecific Energy Consumption (GJ/t)
40
30
20
10
0
Figure 2.20: Estimated specific energy consumption of paper and pulp industry
6
(GJ/t)
2.2.7 Ethylene
Petrochemicals are energy-intensive and contribute significantly to environmental pollution and
greenhouse gas (GHG) emissions. Globally, the petrochemical sector has a significant carbon
footprint, accounting for about 17% of industrial carbon-dioxide emissions (Cullen et al., 2022).
While these emissions come from chemical reactions, high-temperature heat generation, energy
conversion processes, and end-of-life treatments, additional emissions are also produced during
the use phase and from upstream oil and gas operations. Naphtha and natural gas are important
feedstocks for manufacturing petrochemicals.
In India, the petrochemical sector has witnessed exponential growth. Considering the diversity
and complexity of the petrochemical industry, this study is focused on ethylene, which is the
basic chemical building block for daily-use products, such as plastics and textiles. Ethylene is
produced conventionally through the steam-cracking process from a range of hydrocarbon
feedstocks like naphtha and ethane. Steam cracking is a highly endothermic process, requiring a
significant input of heat, typically reaching temperatures around 750°C to 900°C, to break down
large hydrocarbon molecules into smaller ethylene and propylene molecules (Haribal, 2018).
This makes steam cracking one of the most energy-consuming processes in the petrochemical
industry.
In the last 21 years (from 2002-03 to 2023-24), ethylene production in India grew at a CAGR
of approximately 4.7%, driven by increasing domestic demand for downstream products such
as plastics, packaging materials, synthetic fibres, and chemicals. Total ethylene production in
2023-24 was approximately six million tonnes; however, per capita production was only about
4.5 kg, compared to the global average of approximately 28 kg per capita (Department of
Chemicals and Petrochemicals, Ministry of Chemicals and Fertilisers, 2025).
6 Estimated based on the mix of grid electricity and fuel required for the thermal energy and captive electricity for
different technology type. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 37
Landscape of the Industry Sector in India
7
6
5
4
3
2
1
0
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
Million Tonnes
Figure 2.21: Historical production of ethylene (million tonnes)
Specific Energy Consumption
The naphtha route accounts for around 44% and the ethane route for about 55% of current
ethylene production. The naphtha route for ethylene production consumes 25.7 GJ/t of thermal
energy, 0.6 GJ/t of electrical energy, and 148.53 GJ/t from feedstock. The ethane route requires
17 GJ/t of thermal energy, 0.7 GJ/t of electrical energy, and 62.4 GJ/t from feedstock
7
(Figure
2.22).
200
180
160
140
120
100
80
60
40
20
0
Naphtha RouteNatural Gas Route
Fuel Consumption in Ethyelene (GJ/t)
Thermal Energy Electrical Energy Feedstock
Figure 2.22: Estimated fuel consumption in ethylene production (GJ/t)
7 Based on Industry consultation Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 38
Landscape of the Industry Sector in India
2.2.8 Chlor-Alkali
The chlor-alkali industry is a cornerstone of the global chemical sector, enabling a broad spectrum
of industrial and consumer applications through the production of key inorganic chemicals such
as caustic soda (sodium hydroxide), soda ash (sodium carbonate), and liquid chlorine. These
chemicals are critical inputs across various sectors. Caustic soda is used extensively in alumina
refining, paper and pulp production, textiles, soaps and detergents, and water treatment. Soda
ash serves as a key raw material in the manufacture of glass, synthetic detergents, and sodium-
based chemicals, and is also used in water softening. Liquid chlorine is used in the production
of PVC, chlorinated solvents, bleaching agents, disinfectants, and plays a crucial role in water
purification and sanitation.
Globally, the chlor-alkali sector produces over 80 million tonnes of caustic soda and over 70
million tonnes of soda ash annually, with significant concentration in regions like China, the U.S.,
and the EU (Prismane Consulting, 2025). India is among the top five producers of chlor-alkali
products, with caustic soda production over 3.6 million tonnes in 2024 and soda ash production
at approximately 2.9 million tonnes (Department of Chemicals and Petrochemicals, Ministry of
Chemicals and Fertilisers, 2025). Liquid chlorine, a byproduct in caustic soda production, is also
produced in significant quantities and plays a vital role in multiple downstream industries. The
production of one tonne of caustic soda typically yields around 0.7 tonnes of chlorine, usually
in liquid form (BEE). Figure 2.23 presents the historical production of Chlor-Alkali products in
India. In last twenty two years (from 2001-02 to 2023-24), Caustic Soda demand grew at 3.9%
CAGR due to its rising use in textiles, alumina, and water treatment, supported by urbanisation
and industrial expansion. Soda ash grew at a CAGR of 2.2%, driven by consistent demand from
glass, detergent, and chemical industries.
Million Tonnes
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
10
9
8
7
6
5
4
3
2
1
0
Soda Ash
Caustic Soda Liquid Chlorine
Figure 2.23: Historical production of chlor-alkali products (million tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 39
Landscape of the Industry Sector in India
Caustic Soda industry also saw a huge transformation from mercury to membrane technology
(Electrolysis of brine), which is eco-friendly and energy efficient (UN Environment, 2017). In this
process, almost 70% energy is consumed by the electrolyser (BEE). In Caustic Soda production,
the share of thermal energy is 42% with rest being electric. In case of Soda Ash, which uses
solvay and dry lime process for production, the share of thermal energy is ~94% .
The average specific energy consumption in 2025 for Soda ash is 8.54 GJ/t (8.00 GJ/t thermal
and 0.54 GJ/t electrical), while the same for caustic soda is 15.50 GJ/t (comprising 6.50 GJ/t
thermal and 9.00 GJ/t electrical), as shown in Figure 2.24.
Low-carbon transition of the Indian chlor-alkali sector includes phasing out mercury-based
technology through a shift to membrane-based technology, improving process automation,
energy efficiency and electrification using renewable energy. As India pursues self-reliance in
chemicals manufacturing under initiatives like Make in India and Aatmanirbhar Bharat, the chlor-
alkali sector is set to play a central role in meeting domestic industrial needs while transitioning
toward a more sustainable and circular production model.
GJ/tonne
18
16
14
12
10
8
6
4
2
0
Soda AshCaustic Soda
Specific Energy Consumption
Thermal Energy Electrical Energy
Figure 2.24: Estimated specific energy consumption in chlor-alkali products (GJ/t)
While green hydrogen-based ammonia offers transformative potential, the carbon requirement
in urea synthesis complicates a complete transition. Still, adopting green ammonia, especially
with external CO₂ sourcing, could make the industry net carbon-negative.
2.2.9 Refinery
India is heavily reliant on imported crude oil to meet its energy demands, importing over 87%
of its crude oil requirements. In 2023-2024, India imported approximately 234 million tonnes
(Mt) of crude oil, primarily from Iraq, Saudi Arabia, Russia, and the UAE. However, in the refining
sector, India has steadily positioned itself as one of the world’s leading refining hubs. As of 2025,
India operates a refining capacity of about 258 million tonnes per annum (Mtpa), equivalent
to about 5 million barrels per day. This places it as the fourth-largest refining country globally,
after the United States, China, and Russia. As shown in Figure 2.25, the refinery capacity in the
last 23 years has grown with a CAGR of 3.6% (PPAC; PIB, 2025). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 40
Landscape of the Industry Sector in India
Refinery Capacity (Million Tonne)
300
250
200
150
100
50
0
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
Figure 2.25: Historical trend of refining capacity in India (million tonnes)
Indian refineries process a broad range of crude qualities and maintain relatively high levels of
capacity utilisation, averaging over 90%, which is significantly above the global average (PIB,
2025). This operational efficiency, combined with a growing domestic demand for transport
fuels and petrochemicals, has made India one of the few countries where refining capacity
continues to expand even as the global refining industry contracts in response to the energy
transition. Figure 2.26 shows the historical trend of production of various petroleum products
in India.
300
250
200
150
100
50
0
2012-132013-142014-152015-162016-172017-18 2018-192019-202020-212021-222022-23
Petroleum Product Production (Million Tonne)
LPG Naphtha ATF SKO HSD LDO Lubes FO LSHS Bitumen Others*MS
Figure 2.26: Historical production of various petroleum products (million tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 41
Equivalency factors considered in this study for the conversion of crude oil to oil products
(Diesel, Petrol, ATF, LPG, Petcoke, Fuel oil, Naphtha, Kerosene) are provided in Annexure-VI.
Despite its growth, the sector faces significant sustainability and climate-related challenges.
India’s refining sector accounted for roughly 2.8% of the country’s total greenhouse gas (GHG)
emissions in 2020. As refinery throughput grows, these emissions are expected to rise if no
mitigation strategies are deployed. One of the major contributors to these emissions is the
widespread use of grey hydrogen, produced from steam methane reforming (SMR), for refinery
processes such as hydrocracking and desulphurisation.
Specific Energy Consumption
The Indian refinery industry is among the energy-intensive sectors due to the processing of
heavier and more complex crude slates. The electricity and steam consumption of refineries
typically accounts for 1.6 GJ/t of crude oil processed. In addition to electricity, hydrogen
consumption is a critical component of refinery energy use, averaging 8-8.5 kg of hydrogen
(0.95 GJ) per tonne of crude oil, depending on the degree of refinery integration and complexity.
Higher hydrogen demand is driven by extensive use of hydrotreating and hydrocracking units,
which are necessary to remove sulphur and other impurities.
Beyond electricity and hydrogen, refineries also consume substantial thermal energy, amounting
to approximately 1.47 GJ/t of crude oil processed, largely for process heating and steam
generation. Steam used in refineries is obtained from co-generation in power plants. At present,
a significant share of this electricity, steam, and thermal energy demand is met through internal
energy sources, including the combustion of refinery fuel gas, purge gas, synthesis gas from
grey hydrogen production, and other own petroleum products in captive power plants, boilers,
and furnaces. The consumption of electricity, hydrogen and thermal energy tend to increase with
deeper conversion, higher product quality requirements, and greater integration of refining and
petrochemical operations. Figure 2.27 shows the electricity and thermal energy consumption
from various fuels and hydrogen consumed for each metric tonne of crude oil processed.
Fuel Consumed in Refineries (GJ/t)
Petcoke/
Coal
Fuel for Electricity/SteamFuel for Thermal EnergyHydrogen
Diesel/Fuel
Oil
Petcoke/
Coal
Syn Gas/
Natural Gas
Diesel/Fuel
Oil
Purge Gas/
LPG
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Figure 2.27: Fuel consumption in refinery sector in India (GJ/t) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 42
Landscape of the Industry Sector in India
The key elements to decarbonise this sector include the gradual replacement of grey hydrogen
with green hydrogen, produced through water electrolysis powered by renewable energy. The
sector is also focusing on increasing energy efficiency, deploying carbon capture, utilisation,
and storage (CCUS) technologies, and integrating renewable energy into refinery operations.
2.2.10 Other Energy-Intensive Sectors: MSME sector
Following key industrial sectors like steel, cement, aluminium, fertilisers, and textiles, Micro,
Small, and Medium Enterprises (MSMEs) represent a significant and diverse segment of India’s
industrial landscape. Globally, MSMEs span energy-intensive sub-sectors including textiles, pulp
and paper, chemicals, bricks, glass, pharmaceuticals, leather, food processing, forging, and
foundries, all of which contribute notably to industrial emissions.
MSMEs comprise 90% of all businesses worldwide, contribute to 50% of global GDP, and
provide 70% of global business-sector employment (ICSB 2024). In advanced economies,
MSMEs account for 80% of employment in professional services and 92% in construction, while
contributing relatively less to value addition. In emerging economies, they dominate trade (83%
of employment) and manufacturing (71%), playing a vital role in job creation despite limited
value capture (McKinsey 2024).
India is home to an estimated 63.3 million MSMEs, accounting for 30.1% of GDP, over 250
million jobs, and 45.7% of the country’s exports. The manufacturing MSMEs alone employ 36
million people across nearly 20 million units, representing 57% of all manufacturing employment
(FICCI, 2023; MoMSME, 2024). The sector also contributes to approximately 25% of industrial
energy consumption and emits an estimated 135 million tonnes of CO₂ in 2022 (FICCI, 2023;
MoMSME, 2024).
Textiles (19%), paper (13%), steel re-rolling (8%), forging (8%), and foundries (9%) collectively
account for nearly 60% of MSME emissions (Figure 2.28). Less prominent sub-sectors, including
chemicals, pharmaceuticals, and leather, contribute another 35%. Fuel-wise, emissions are
primarily driven by electricity (47%) and coal (43%), which together account for 90% of total
emissions. The continued use of outdated equipment, such as inefficient furnaces, motors, and
boilers, significantly worsens the sector’s carbon footprint (BEE, 2019).
Sectoral Emission DistributionFuel-wise Emission Dependence
Textile,
19%
Paper,
13%
Forging, 8%
Petcoke, 2%
RE Electricity, 0%
Furnace Oil, 4%
PNG, 4%Biomass, 0%
Firewood, 0%
Agro. Residue, 0%
Steel Rerolling, 8%
Foundry, 9%Chemical, 1%
Food Processing, 3%
Pharma, 1%
Leather, 1%
Glass, 1%
Brick, 1%
Others,
35%Coal,
43%
Electricity
47%
Figure 2.28: Emission distribution across Indian MSME sectors
Source: (BEE, 2018) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 43
Landscape of the Industry Sector in India
Globally, enterprises with 5–99 employees generate over half of net employment creation.
However, despite their economic significance, MSMEs’ environmental footprint remains poorly
documented. Existing evidence indicates they account for a sizable share of global carbon
emissions and energy use. For instance, SMEs generate 63% of business-driven direct carbon
emissions in the EU (OECD 2023), while the OECD estimates that SMEs consume 13% of global
energy and one-third of industrial and service-sector energy (OECD 2023).
In India, cost considerations often overshadow environmental concerns. As a result, investments
in energy efficiency, renewable energy, or pollution control are typically deprioritised. However,
low-carbon transition, particularly through reduced fossil fuel consumption, offers dual benefits
of emissions reduction and cost savings. Implementing energy-efficient (EE) technologies can
enhance competitiveness, improve energy security, and reduce operational costs (TERI, 2022).
Recognised as the “first fuel” of clean energy transitions, energy efficiency offers quick, cost-
effective mitigation of CO₂ emissions. Technology upgrades and operational improvements can
lower both emissions and energy intensity. Several incentives, including accelerated depreciation
and credit-linked subsidies, are available to MSMEs investing in EE technologies, with payback
periods ranging from one to 5 years. In addition, switching to cleaner fuels such as biomass,
biofuels, LPG, PNG, and adopting process electrification can reduce dependence on grid
electricity and high-emission fuels like diesel (Ministry of Power, 2025; IEA, 2025).
Government efforts at the central and state levels have introduced multiple schemes to support
MSME transition, ranging from financial assistance to resource efficiency programs (MoMSME
2022; MoMSME):
Financial Assistance:
MSE GIFT (Green Investment and Financing for Transformation): provide
concessional finance to MSME for adopting green technologies such as solar roof
top, solar pumps, small hybrid solar-wind system, small off-grid wind system, and
waste management, biogas plants from organic waste, etc.
CGTMSE/CGSS (Credit Guarantee Fund Trust for Micro and Small Enterprises/
Credit Guarantee Scheme for Startups): facilitates collateral-free credits to Micro
and Small Enterprises by providing guarantee cover.
Resource Efficiency
MSE SPICE (Scheme for Promotion and Investment in Circular Economy):
empowers MSEs to adopt sustainable, resource-efficient and eco-friendly practices.
Digital Transformation
Trade Receivables Discounting System (TReDS): an electronic platform, regulated
by RBI, to help MSMEs convert their unpaid invoices into cash by connecting them
to multiple financiers.
Adoption of greener technologies and fuels not only enables access to low-carbon markets
but also promotes inclusive economic growth through higher profits, business expansion, and
employment generation. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 44
Landscape of the Industry Sector in India
Targeted interventions to reduce MSMEs’ Scope 1 and Scope 2 emissions are critical. Enhancing
energy efficiency, increasing green electricity uptake, and transitioning to alternative fuels
can serve as key levers. However, low adoption persists due to multiple challenges, including
limited technical capacity, constrained manpower, and a predominant focus on production
and marketing. MSMEs require external support to access cutting-edge technologies, technical
know-how, and proven best practices. Figure 2.29 outlines the key barriers to energy efficiency
and clean energy adoption in India’s MSME sector (Mitra, 2023).
Energy EfficiencyGreen Electricity (GE) Alternate Fuel (AF)
Lack of Trust in ecosystem: MSMEs
fail to collaborate with ESCO despite
performance guarantees due to
lack of trust/understanding of such
mechanism.
Awareness and Capacity to
implement latest technology:
MSMEs are unaware of the
technologies and performance
guarantee models run by energy
services companies.
Perceived risk of payment default
by MSMEs: RESCOs require risk of
extending services to MSMEs to be
mitigated due to perceived payment
defaults.
Stakeholder support: State DISCOMs
are required to extend timely support
to the ecosystem to get such renew-
able power plants online.
Awareness on various agro feed:
MSMEs are typically unaware of the
possible agro residues that can be
made into brickettes and pellets for
biomass firing.
Scalability Issues: Many biofuels and
products are perishable and thus
have lower shelf life making it chal-
lenging for logistics. Further, season-
ality factors that impact availability
and many potentially lead to fuel
shortage
Figure 2.29: Key barriers to MSME adoption of s ustainable energy solutions
Source: (Mitra, 2023); (Mori, 2024); (CSTEP, 2024); (TERI, 2020)
2.3 LOW-CARBON TRANSITION LEVERS
Globally and in India, industrial low-carbon transition is advancing through key interventions:
energy and material efficiency, non-fossil electricity, green procurement mandates (including
green public procurement), process electrification, alternative fuels, technological innovation,
and carbon capture, utilisation, and storage (CCUS). These levers are gaining traction across
sectors and have been supported by a range of policy instruments that focus on balancing
energy security, industrial competitiveness, and environmental sustainability. These efforts are
intended to promote technology adoption at both the MSME and large-industry levels.
The sections below highlight select technologies currently central to global and Indian transition
pathways, along with high-impact policies under each low-carbon transition lever.
2.3.1 Energy Efficiency
8
Energy efficiency remains a foundational strategy for industrial low-carbon transition. In India,
the Bureau of Energy Efficiency (BEE), under the Ministry of Power, launched the Perform,
Achieve and Trade (PAT) scheme to accelerate the adoption of energy-efficient technologies
in energy-intensive sectors.
Initial PAT phases established sectoral baselines and benchmarked performance against global
standards. Energy audits and technical studies at Designated Consumer (DC) levels identified
targeted interventions, leading to widespread adoption of efficient technologies, many of which
were developed indigenously. Having implemented early, multi-sectoral interventions, India has
closed a significant portion of the low-hanging energy performance gap. By the end of PAT
8 BEE Reports Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 45
Landscape of the Industry Sector in India
Cycle VI, cumulative CO₂ savings exceeded 110 million tonnes. The focus now shifts to wider
adoption of efficiency and to driving deeper, harder-to-abate efficiency improvements that
require sustained investments, technical support, and policy incentives (BEE, 2023).
Table 2.2: Summary of energy savings (BEE, 2023-24)
Program/ Scheme Sector
Electricity
Savings
(BU)
Total Energy
Savings
(Mtoe)
GHG
Reduction
(MtCO₂)
Monetary
Savings
(INR Crore)
PART - VI
Large Industry
- 1.3 4.5-
PAT - V0.008 0.68 3 1256
PAT - IV0.009 0.75 3 1385
PAT - III0.62 2 5.59 3223
PAT - II36 14 69 43078
PAT - I3 8.67 31 9500
BEE - GIZ MSME0.0 0.0 0.0 0.74
ECBC
Commercial
Building
0.64 0.36 0.53 102
BEE Star Rating
GRIHA
ENS
Residential
Buildings
S&LAppliances 89 8 63 56535
UJALALED Lamps 182 15 130 72800
SLNPMunicipal 9 0.76 6 5535
CAFE-ITransport2 6 6795
Total321.39 53.60 321.06 200212.84
Table 2.3: Policy instruments supporting energy efficiency in industry
Policy / Scheme Applicability Administering BodyDetails
Perform, Achieve and
Trade (PAT) (BEE
2020)
Energy-intensive
sectors like steel,
cement, aluminium,
textiles, paper
BEE, MoP
Cap-and-trade scheme
to reduce specific energy
consumption; enables trading
of Energy Saving Certificates.
Energy Efficiency
Financing Platform
(EEFP) (BEE 2023)
MSMEs and large
industries across
sectors
BEE, SIDBI, IREDA
Platform to ease financing
for EE projects via
standardisation and risk-
sharing mechanisms. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 46
Landscape of the Industry Sector in India
Policy / Scheme Applicability Administering BodyDetails
Promoting energy
efficiency and
renewable energy in
selected MSME clusters
in India (BEE 2023)
MSME clusters
in engineering,
food processing,
ceramics, etc.
UNIDO, BEE, GEF
Capacity building and
implementation support to
MSMEs for energy-efficient
technologies.
Credit Linked
Capital Subsidy
and Technology
Upgradation Scheme
(CLCS-TUS) (MoMSME
2023)
Small and medium
industries in high
energy-use sectors
MoMSME, BEE
Supports modernisation
of technologies in SMEs
for improved energy
performance.
Custom Industrial
Pilots (e.g., UNIDO-
BEE MSME demo
projects)
Sector-specific
(foundries,
ceramics)
MoMSME, BEE,
UNIDO
Demonstrated the feasibility
of electric heating and
drying systems, but not
scaled via policy yet.
2.3.2 Electrification
Industrial heat generation accounts for 20% of global energy demand and is a major source
of emissions. Fossil fuels dominate the process heat mix, with electricity comprising just 11%.
However, about 45% of industrial heat demand is in the low-temperature range (<200°C),
presenting a significant electrification opportunity (Figure 2.30) (IEA, 2018).
Industrial heat
demand by
temperature range (%)
0%40%80%20%60%100%
Low (Upto 200 °C) Medium (Upto 500 °C) High (Above 500 °C)
Figure 2.30: Global industrial heat demand across low, medium, and high temperature
ranges
Source: (IEA, 2018)
Emerging electric heating technologies cater to varied temperature needs. For low- to mid-
range applications (200°–500°C), MSMEs in food processing, textiles, and pulp and paper are
adopting heat pumps, Mechanical Vapour Recompression (MVR), and electric boilers. High-
temperature technologies like turbo and induction heaters can exceed 1,000°C. The economic
attractiveness of these technologies is rising in regions with high gas prices and carbon pricing
(BEE). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 47
Landscape of the Industry Sector in India
Table 2.4: Temperature range of potential electric heating technologies
Temperature Range (°C)Potential Electric Heating Technologies
Up to 200 Heat Pump, Electric Boilers
Up to 500Electric boilers, Combined Thermal storage systems,
Resistance heating, Process Air Heaters
Beyond 500Induction heating, Plasma torches, Electric arc furnaces,
Shockwave heating, RotoDynamic Heaters (RDH)
India is promoting such technologies under BEE initiatives, listing electric boilers and process
upgrades as recognised efficiency measures. While arc furnaces are exceptions, electricity
remains underutilised for process heat due to higher levelised costs relative to fossil fuels (MoP
2024).
Box-7: Case Study: Heat Pump Replacing Gas Boiler in a Dairy facility
9
Heat pumps are increasingly being recognised as a viable solution for electrifying low-
to medium-temperature industrial heat applications. Their ability to utilise ambient
or waste heat sources and convert them efficiently into process steam makes them
particularly attractive for sectors such as food processing and dairy. A notable example
comes from Norway, where Olvondo Technology collaborated with a dairy factory to
replace gas-fired steam boilers that previously consumed 21.1 GWh of electricity annually.
The company installed four high-temperature HighLift heat pumps that used a 25°C
waste heat source to generate steam in the range of 175°C to 184°C. This intervention
resulted in annual electricity savings of 5 GWh, a 30% reduction in energy costs, and
additional secondary savings of USD 33,000 per annum. Most importantly, the shift led
to a 66% reduction in CO₂ emissions and was able to meet 95% of the facility’s steam
demand, demonstrating the significant potential of heat pump technologies in industrial
low-carbon transition.
Table 2.5: Schemes facilitating electrification of industrial processes
Policy / Scheme Applicability Administering Body Details
Credit Linked
Capital Subsidy
and Technology
Upgradation
Scheme (CLCS-
TUS) (MoMSME,
2023)
Small and medium
industries in high
energy-use sectors
MoMSME, BEE
Supports modernisation of
technologies in SMEs for
improved energy performance.
Custom Industrial
Pilots (e.g., UNIDO-
BEE MSME demo
projects)
Sector-specific
(foundries,
ceramics)
MoMSME, BEE,
UNIDO
Demonstrated the feasibility
of electric heating and drying
systems, but not scaled via
policy yet.
9 Industrial Heat Pumps: It’s time to go electric Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 48
Landscape of the Industry Sector in India
2.3.3 Low-Carbon Electricity Production
Indian industries remain heavily reliant on grid electricity, which is primarily coal-powered.
MSMEs in textiles, plastics, rubber, and food processing source 70–85% of their electricity from
the grid, while larger sectors like cement, aluminium, and steel rely more on captive power
(see Figure 2.31). In 2022, India’s grid emission intensity stood at approximately 715 gCO₂/kWh,
significantly higher than countries like France (~27 gCO₂/kWh) (CEA, 2023; Nowtricity, 2024).
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Aluminium
Cement
Chemicals
Fertiliser
Food Prodcuts
Iron & Steel
Non Ferrous
Paper
Plastic
Rubber
Textile
% Grid Dependency
9%
38%
39%
23%
71%
34%
25%
21%
57%
85%
75%
Figure 2.31: Grid dependence across key industrial sectors (2022–23)
Source: (CEA, 2024)
India is expanding its clean electricity capacity, reaching around 267 GW of non-fossil based
(utility) as of Dec. 2025 (CEA, 2025). Industrial (non-utility) renewable installations reached
8,974 MW, dominated by solar (3,610 MW, 40%) and wind (4824 MW, 53.75%) by 2023-24 (CEA,
2025). Biomass contributes just 265.9 MW, though it is more widely used indirectly via steam
and waste heat recovery in sectors like sugar and paper (Table 2.5).
While solar and wind remain the most scalable solutions, their expanded adoption, especially
through captive generation, is gradually reshaping industrial electricity use.
India is also beginning to position nuclear power, particularly Small Modular Reactors (SMRs),
as a future option for low-carbon captive supply to energy-intensive industries. Recent
announcements under the Nuclear Energy Mission for Viksit Bharat envisage indigenously
designed SMRs such as the 200 MWe Bharat Small Modular Reactor and a 55 MWe SMR that
can be deployed close to industrial loads or at repurposed coal plant sites, with NPCIL inviting
private industry participation for captive Bharat Small Reactors to serve sectors like steel,
aluminium and chemicals (PIB, 2025). The SHANTI Act, 2025, which opens nuclear generation
to greater private and joint-venture participation and explicitly promotes SMRs for industrial Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 49
Landscape of the Industry Sector in India
and captive use, can enable commercial nuclear solutions to complement renewable energy in
decarbonising industrial electricity demand over the medium to long-term (PIB, 2025).
Table 2.6: Renewable electricity usage by industry (2022–23) (BEE, 2022-23)
Industry RE Generation (GWh) Energy Consumption (GWh) % RE of Total Consumption
Rubber422140.18
Textile66166810.4
Food Products 1638230.42
Plastic711990.58
Aluminium584529671.1
Non Ferrous6152841.15
Chemicals211183641.15
Paper17583202.1
Cement785301032.61
Iron & Steel 2195779402.82
Table 2.7: Policies enabling procurement and use of low-carbon electricity
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
Renewable
Purchase
Obligation (RPO)
(MoP, 2022)
Obligated entities,
including large industries
with open access
consumption
MNRE, MoP,
CERC, SERCs
Mandates minimum RE
procurement targets; updated
to include green hydrogen and
green ammonia obligations.
Green Energy Open
Access Rules
(MoP, 2022)
Industries with contracted
demand >=100 kW to
procure RE directly
MNRE, MoP,
CERC, NLDC
Simplifies RE procurement and
banking; ensures faster approval
and concessional charges for
industrial users.
Green Term Ahead
Market (GTAM)
(MNRE, 2020)
Industries participating
in power exchange
for short-term RE
procurement
CERC, IEX
Enables industries to buy RE
(solar, wind) on a short-term
basis through IEX without a long-
term PPA.
ISTS Waiver for
RE Projects (MoP
2023)
RE generators supplying
to industrial users via
open access
MNRE, CEA
Waives interstate transmission
charges for solar and wind power
until June 2025 for open access
projects.
2.3.4 Alternative Fuels
India’s energy landscape is dominated by fossil fuels and significant imports. In 2023–24, 89%
of crude oil and 47% of natural gas were imported. Coal consumption reached 1,277 million
tonnes, of which 20% was imported, with steel alone consuming 58 million tonnes. (BEE 2024)
India is now prioritising alternative, low-emission fuels such as biofuels, cleaner fossil fuels Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 50
Landscape of the Industry Sector in India
(CFFs), and electrofuels (E-fuels). Globally, low-emission fuels accounted for just 1% of final
energy use in 2022.
Table 2.8: Types of low-carbon fuels
Category DefinitionExamples
Biofuels
Fuels produced from biological/organic
materials
Ethanol, biodiesel, bio-oils, bio-
alcohols (methanol, butanol)
Cleaner Fossil
Fuels (CFFs)
Fossil-based fuels with relatively lower
lifecycle emissions
LPG, LNG, RDF-based fuels, crude
oil-based fuels with carbon capture
E-fuels
A broad set of technologies that
convert non-fossil electricity into fuels,
chemicals, or power
(Power to X)
Green hydrogen, green ammonia,
e-methanol, synthetic methane,
e-diesel
Source: India Energy Scenario 2023-24, MoP; Fuels Industry UK (BEE, 2024)
Biofuels
Adoption is strong among MSMEs with access to in-house feedstock. For example, paper and
pulp units use black liquor and wood residue, and sugar mills leverage bagasse cogeneration,
supporting both in-house energy and national ethanol blending targets (20% blending by
2025–26). Agricultural residue use is rising in food processing and textiles, though biofuel
adoption remains limited in hard-to-abate sectors (MNRE 2013; Gosavi & Katti, 2016; Nagar &
Kumar, 2024).
Box-8: Biofuels in India
According to Energy Statistics of India 2025, as of March 31, 2024, Biomass, which
includes agricultural waste, forest residues, and other organic matter, has a potential
of 28,447 MW of energy generation, accounting for 1% of the total renewable power
potential.
Cogeneration from Bagasse: India has a specific potential of 13,818 MW (1%) from
bagasse-based cogeneration in sugar mills. This is a highly efficient form of energy
generation, especially in regions with a robust sugar industry.
Cleaner Fossil Fuels (CFFs)
India’s gas pipeline network spans 24,720 km, and another 8,600 km is under construction.
Industrial natural gas use more than doubled from 701 Million Metric Standard Cubic Meters
(MMSCM) in FY 2019–20 to 1,457 MMSCM in FY 2023–24. Refuse-Derived Fuel (RDF) from
municipal solid waste, currently underutilised, is primarily consumed by the cement sector,
replacing 10–15% of conventional fuels. Only 2,000–3,000 tonnes of RDF are produced daily Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 51
Landscape of the Industry Sector in India
across 30+ plants. Scaling RDF infrastructure is critical to reducing landfill waste and increasing
industrial substitution (Swamy & Arora, 2024).
E-fuels:
Green hydrogen is the leading E-fuel, with growing use in the steel and fertiliser sectors. While
cost remains a barrier, projects and pilots across India are gaining momentum. Hydrogen
blending in natural gas and its use in industrial boilers are also being explored. A supporting
ecosystem is emerging through policy signals and pilot projects to scale up production and
reduce costs (NITI Aayog & RMI 2022).
Table 2.9: Green hydrogen projects, (MNRE, 2023)
Project Name Status Location End Use
Electrolyser
Capacity
(MW)
Project
Capacity
(Tonnes
H
2
P.A.)
OIL India - Jorhat
Pump Station AEM
Electrolyser
Commissioned Assam
Blending with
Natural Gas
0.1 3
NTPC - City Gas at
NTPC Kawas
Commissioned
Gujarat –
Surat
Blending with
Natural Gas
0.05 0.7
ACME - Green
Hydrogen and Green
Ammonia Plant,
Rajasthan
Commissioned
Rajasthan -
Bikaner
Fertilisers 2.1 314
NTPC - Green
Hydrogen for Ladakh
Fuelling Station
Commissioned
Ladakh -
Jammu and
Kashmir
Mobility 0.206 29
Hygenco Heartland
Ujjain Hydrogen Plan
Commissioned
Madhya
Pradesh
- Ujjain -
Makone
Research 0 0
Shell - Bengaluru
Green Hydrogen
Project
Commissioned
Karnataka -
Bangalore
Green
Hydrogen
1 142
L&T - Green Hydrogen
Plant
Commissioned
Gujarat –
Hazira
Heavy
Industry
1 157
GAIL- GH
2
Project Commissioned
Vijaipur
Complex,
Madhya
Pradesh
PEM
electrolyser
for the GH
2
producing
unit
10 1570 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 52
Landscape of the Industry Sector in India
Project Name Status Location End Use
Electrolyser
Capacity
(MW)
Project
Capacity
(Tonnes
H
2
P.A.)
SJVN Limited -NJHPS
Multi-purpose GH
2
Pilot
Project
Commissioned
Jhakri,
Himachal
Pradesh
Green
Hydrogen
generation
0.1 4
Table 2.10: Government initiatives promoting low-carbon and alternative fuels
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
National Green
Hydrogen Mission
(MNRE 2023a)
Steel, fertilisers, refining,
and chemical industries
with high hydrogen use
MNRE,
MoPNG, MoF
Incentivises green hydrogen
production and use in industrial
processes; targets 5 Mt by 2030.
MSW to Refuse
Derived Fuel
(RDF) Policy
(Solid Waste
Management
Rules, 2016)(MNRE
2023b)
Cement, pulp & paper,
and other industries using
RDF for co-processing
MoHUA,
MoEFCC
Mandates urban local bodies
to channel RDF from municipal
waste to eligible industries for
co-processing.
National Policy
on Biofuels (2018,
amended, 2022)
(MoPNG, 2022)
Distilleries, sugar, paper,
textile industries using
bio-oil, biochar, or 2G
ethanol
MoPNG, MNRE
Supports industrial biofuel
applications, including 2G
ethanol, biodiesel, biochar, and
other renewable fuels.
Bio-Energy
Programme
(Waste to Energy
Sub-scheme)
(MNRE 2022)
Industries using RDF,
biomass pellets, or
bio-CNG for thermal
substitution
MNRE
Provides financial support for
industrial adoption of waste-
derived fuels and related
infrastructure.
Gujarat Green
Hydrogen Policy
2024
(GEDA, 2024)
Industries in Gujarat are
piloting green hydrogen-
based process fuel
switching.
Govt. of
Gujarat
Offers capital subsidies and
demand aggregation incentives
for hydrogen fuel switching in
industries.
PM-JI-VAN
Scheme (PIB,
2023)
Provides financial support
to 2nd-generation biofuel
production plants –
both commercial and
demonstration.
Centre
for High
Technology
(CHT), MoPNG
Financial assistance in the
form of viability gap funding
is provided – INR 150 crore for
commercial projects and INR 15
crore for demonstration projects.
2.3.5 Circular Economy
The circular economy offers potential for emission reductions by lowering demand for virgin
materials. Globally, only 7.2% of materials in 2023 were from circular sources (down from
9.1% in 2018). Yet, recycling rates are growing: 90% of steel, 73% of aluminium, 60% of paper,
40% of copper, and 27% of concrete waste is recycled worldwide (Deloitte & Circle Economy
Foundation, 2023).
Steel: India’s Steel Scrap Recycling and Vehicle Scrapping policies promote circularity, Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 53
Landscape of the Industry Sector in India
though scrap availability remains a challenge. India imported 9.8 million tonnes of
ferrous scrap in 2022–23, 30% of total demand (Kumar & Agarwal, 2024). Scrap-
based steelmaking is vital for low-carbon transition and aligns with regulations like
the EU’s CBAM.
Cement: The sector uses industrial and other waste (e.g., fly ash, slag, gypsum, RDF,
biomass). Further progress is needed to reduce clinker use and improve concrete
efficiency through strategies like longer building lifespans and construction waste
recycling (GCCA & TERI, 2025; Deloitte & Circle Economy Foundation, 2023).
Aluminium: Against a global recycling at 98%, the 30% rate in India is low. The Non-
Ferrous Metal Scrap Recycling Framework seeks to formalise scrap processing and
expand secondary aluminium production, which requires only 5% of the energy used
in primary production, delivering substantial emissions savings (Deloitte & Circle
Economy Foundation, 2023).
Box-9: Case Study: Nucor Steel
HNucor Corporation (USA) is a global leader in circular steel production. Nearly 70%
of Nucor’s steel is produced using Electric Arc Furnace (EAF) technology, which
relies mainly on scrap metal and results in 75% lower emissions intensity compared to
traditional blast furnace routes.
Key Achievements:
Over 20 million tonnes of scrap recycled annually.
GHG intensity of 0.45 tCO
2
/tonne of steel, compared to the global average of
~1.85 tCO
2
/tonne.
Achieved Scope 1 & 2 emissions that were 67% below the global steelmaking
average.
Committed to Net Zero by 2050, with interim targets set for 2030.
Table 2.11: Circular economy policies for resource recovery and industrial recycling
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
Steel Scrap
Recycling Policy
(MoS, 2019)
Steel sector using
scrap-based production
(EAF/IF route)
Ministry of
Steel
Promotes the use of steel scrap
for greener production routes,
reducing demand for virgin ore
and energy use.
CPCB Co-processing
Guidelines for Waste
in Cement Kilns
(CPCB, 2017)
Cement and thermal
process industries co-
processing RDF, plastic,
and industrial waste
CPCB, MoEFCC
Allows safe and regulated
industrial waste co-processing
in cement kilns; reduces reliance
on virgin fuels.
Vehicle Scrappage
Policy, (2021)
(MoRTH 2021)
Steel, aluminium, and
auto sectors through
formal scrap recovery
MoRTH, MoHI
Facilitates recovery of end-of-
life vehicles and materials like
steel, aluminium, and plastics for
secondary use. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 54
Landscape of the Industry Sector in India
Policy/Scheme/
Programme
Applicability
Administering
Body
Details
Draft National
Resource Efficiency
Policy (NREP)
(MoEFCC, 2019)
Cross-sectoral push
for secondary resource
use in industrial supply
chains
MoEFCC
Outlines targets for material
efficiency, reuse, and recycling
in industrial value chains; yet to
be finalised.
Extended Producer
Responsibility (EPR)
(ORF, 2025)
Holds producers
responsible for the
disposal and handling
of products post-
consumption.
MoEFCC, CPCB
Mainly responsible for reducing
packaging waste, this policy
has been aimed at single-use
plastics. However, the same has
been extended to e-waste as
well.
2.3.6 Carbon Capture, Utilisation, and Storage
Carbon Capture, Utilisation, and Storage (CCUS) is emerging as a key pillar of India’s industrial
sector low-carbon transition strategy, particularly for hard-to-abate sectors such as steel, cement,
refinery and chemicals. A dedicated “Carbon Capture, Utilisation, and Storage (CCUS) Policy
Framework and its Deployment Mechanism in India” released by NITI Aayog positions CCUS
as critical for enabling low-carbon industrial growth, while recognising the cost and regulatory
challenges associated with early deployment (NITI Aayog, 2022).
India is beginning to build a CCUS ecosystem through pilot and demonstration projects,
academia-industry testbeds, and new policy instruments. Initial efforts include cluster-based CCU
testbeds in the cement sector, emerging proposals for CO
2
transport and storage infrastructure,
and exploratory work on linking CCUS projects with evolving domestic carbon markets and
potential international carbon finance. Though nature-based solutions continue to complement
these efforts, industrial low-carbon transition is increasingly anchored in technological measures
such as CCUS to deal with process emission.
Global momentum further reinforces this direction. By 2022, there were 30 commercial CCS
facilities worldwide, 11 under construction, and 153 in development, with 61 new facilities added
to the pipeline in a single year, reflecting the rapid expansion of the project pipeline. The US,
supported by strong tax incentives, has emerged as the largest CCUS market, while countries
such as Netherlands, Norway and the UK are advancing shared industrial clusters for storage
and transport. This offers relevant lessons for India’s emerging plans for CCUS hubs linked to
major industrial and coastal corridors.
Table 2.12: CCUS projects and initiatives in India
Industry CompanyDetails of the project
Steel Tata Steel
Tata Steel commissioned a 5 tpd CO
2
capture plant
from the blast furnace at the TSL Jamshedpur site, with
upcoming plans to re-use the captured CO
2
within the
process value chain.
JSPL
JSPL commissioned a 2000 tpd CO
2
capture plant from
the coal gasification operations at Angul, with plans for CO
2
utilisation into bio-ethanol, methanol, and soda ash, etc. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 55
Landscape of the Industry Sector in India
Industry CompanyDetails of the project
Cement Dalmia Cement
Dalmia Cement signed an MOU with a carbon capture
technology provider at their Tamil Nadu plant to capture
500,000 TPA CO
2
.
Chemical
BHEL and CSIR-
CIMFR
Coal-to-methanol pilot plants commissioned for carbon
capture and their utilisation in methanol production
Tuticorin Alkali and
Chemicals (TFL)
TFL commissioned a 200 tpd CO
2
capture plant, and
captured CO
2
is utilised in baking soda production
Petrochem BPCL
BPCL conducted a feasibility study for the gasification of
1.2 Mtpa petcoke and utilised it in carbon-abated materials,
the power sector, etc.
Oil and Gas
ONGC
ONGC signed an MoU with Shell for a study exploring a
storage site for capturing carbon and EOR in key basins in
India, and another MoU with Equinor for evolving hubs and
projects related to CCUS.
ONGC and IOCL
Conducted a feasibility study for 0.7 Mtpa of captured CO
2
from IOCL’s Koyali refinery and utilising the captured CO
2
for Enhanced Oil Recovery at Gandhar oilfields of ONGC,
and usage in the F&B sector
Power NTPC
Pilot project at Vindhyachal thermal power plant and a plan
to convert captured carbon into methanol.
Development of amine-based technology for CO
2
emissions
capture.
Demonstration of biotechnology-based (microalgae) CO
2
emissions capture.
Pilot plant on CO
2
utilisation (10 TPD CO
2
) for the
generation of an ethanol plant at NTPC power plant
premises.
Pilot project on CO
2
utilisation for the production of
carbonated aggregates by means of fly ash, and to capture
CO
2
from the flue gas of a power plant.
Source: Perspectives on CCUS deployment on a large scale in India: Insights for low carbon pathways Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 56
Landscape of the Industry Sector in India
(NITI Aayog, 2022)
2.3.7 Carbon Management
India’s carbon management framework operates across two complementary levels: domestically
through instruments such as the Carbon Credit Trading Scheme (CCTS) and the MISHTI
initiative, which address industrial compliance and nature-based offsetting, respectively and
internationally through participation in Article 6.4 of the Paris Agreement, which enables cross-
border mitigation and carbon credit trading. Together, these mechanisms establish a layered
approach to industrial low-carbon transition, allowing energy-intensive sectors such as steel and
cement to achieve emission reductions via verified low-carbon options.
Table 2.13: Carbon management and trading mechanisms for industrial emission reduction
Policy/Scheme/
Programme
Applicability Administering
Body
Details
Carbon Credit
Trading Scheme
(CCTS) (BEE
2023)
Industries adopting
low-carbon fuels,
energy efficiency, or
CCS are eligible for
trading credits.
MoEFCC, BEE Operational national compliance carbon
market for verified industrial emission
reductions, governed under the Energy
Conservation Act.
Mangrove
Initiative for
Shoreline
Habitats &
Tangible Incomes
(MISHTI)
(MoEFCC, 2024)
Industries interested
in carbon offsets
through nature-
based solutions
(e.g., coastal cement
plants)
MoEFCC Promotes afforestation and carbon
sink generation in coastal regions,
applicable for offsetting industrial
residual emissions.
Article 6.4 Paris
Agreement
Participation
Industrial projects
in GHG mitigation,
alternative materials,
and removal activities
MoEFCC
(National
Designated
Authority)
Enables trading of Internationally
Transferred Mitigation Outcomes
(ITMOs); key notified technologies
include renewable energy with storage,
green hydrogen, compressed biogas,
CCUS, green ammonia, sustainable
aviation fuel, and emerging energy
efficiency technologies. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 57
Landscape of the Industry Sector in India
Ministry of Steel’s
Green Steel
Taxonomy
(Dec, 2024)
Adoption of
the Green Steel
Taxonomy is not
mandatory. Steel
producers may
opt in to get their
steel assessed and
certified as “green”.
Ministry of
Steel (MoS)
India is the first country to notify a
Green Steel Taxonomy supporting
global competitiveness. “Green Steel”
shall be defined in terms of percentage
greenness of the steel, which is
produced from the steel plant with
CO
2
equivalent emission intensity less
than 2.2 tonnes of CO
2
e per tonne
of finished steel (tfs). The greenness
of the steel shall be expressed as
a percentage, based on how much
the steel plant’s emission intensity is
lower compared to the 2.2 tCO
2
e/tfs
threshold.
Conclusion
India’s industrial sector stands at the core of its development strategy, contributing substantially
to GDP, employment, and export competitiveness, even as the country moves toward a low-
carbon growth model. Balancing rapid industrial expansion with climate mitigation is therefore
essential, particularly in hard-to-abate sectors.
Over the past decade, India has built a robust policy foundation for industrial low-carbon
transition through schemes such as Perform, Achieve, and Trade (PAT), the recently notified
Carbon Credit and Trading Scheme (CCTS), and sector-specific programmes that promote energy
efficiency, electrification, fuel switching and circularity. These instruments reflect an approach
that is responsive to domestic development needs rather than simply mirroring global templates.
Achieving a competitive low-carbon transition, however, will require scaling these efforts through
stronger coordination, deeper markets and accelerated technology deployment. Priority actions
include: tightening and expanding performance-based schemes, setting clear and credible low-
carbon standards for major industrial value chains and designing targeted financial instruments
and de-risking mechanisms, especially for MSMEs, to unlock investment in efficiency, clean
electricity, CCUS and clean fuels. An integrated approach that links policy, regulations, financial
incentives, and innovations can position India not only to meet its Net Zero goals but also to
emerge as a global leader in competitive low-carbon industrial development. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 59
Landscape of the Industry Sector in India
3
INDUSTRY SECTOR
MODELLING AND
RESULTS Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 60
Industry Sector Modelling and Results
This chapter presents the modelling outcomes that explore how India’s industry sector may
evolve under two scenarios: the Current Policy Scenario (CPS) and a Net Zero Scenario (NZS)
aligned with India’s 2070 climate commitment. The results trace changes in commodity demand,
efficiency improvements, technology and fuel mix to 2070, while also examining the investment
requirements needed to enable this transition.
For estimation of industrial energy-use, emissions and investment, the model disaggregates
industry into nine sectors: i) Steel, ii) Cement, iii) Aluminium, iv) Textiles, v) Paper and Pulp, vi)
Ethylene, vii) Chlor-Alkali, viii) Fertiliser and ix) Refineries. Together, these sectors account for
51% of industrial energy demand and ~60% of industrial emissions in 2025. Other sectors, such
as Glass, Bricks, Ceramics, Rubber, Food processing, etc., are not modelled separately due to
limitations in baseline data availability; instead, they are represented as a single aggregated
“other industry” category. Future iterations of this modelling exercise will seek to further
disaggregate this category as data quality and coverage improve.
The next section discusses the sector-wise approach and methodology adopted, including the
results, followed by overall total industrial sector emissions, mitigation strategies and investment
requirements.
3.1 MODELLING FRAMEWORK
For the industry sector, transition pathways are developed utilising an integrated energy system
modelling framework that comprises all major energy-economy sectors and represents their
interlinkage. One of the key inputs to this framework is activity demand for each end-use sector;
in the case of industry, this is the projected production of individual subsectors. Production
trajectories are generated exogenously using a combination of methods, including historical
trend analysis, econometric regression, elasticity analysis and per capita saturation trends in
major economies. Detailed production projections for each industry subsector are presented in
the respective subsector sections. Given these activity projections, the model uses the defined
technology options with their techno-economic parameters and the assumed fuel mix, including
domestic availability, import and price trajectories. The model then determines the evolution of
capacity and fuel use required to meet sub-sectoral production under two scenarios: Current
Policy Scenario (CPS) and Net Zero Scenario (NZS) discussed in the next sections. These
scenario-specific assumptions on technology choice and fuel mix finally determine the estimates
of industrial energy demand, emissions, and investment requirements (see Figure 3.1).
3
Industry Sector
Modelling and Results Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 61
Industry Sector Modelling and Results
Estimated
Production (Mt):
• Iron & Steel
• Aluminum
• Cement
• Fertiliser
• Chemicals
• Soda Ash
• Caustic Soda
• Paper & Pulp
• Textile
• Other Industry
Technology-wise
Production for
Each Sub-sector
Energy
Consumption,
and Emissions
Technology
Penetration
Specific Energy
Consumption, Fuel
Mix, Cost, and
Emission Factors
Figure 3.1: Modelling framework
Demand Estimation
Annual production is projected using two complementary approaches selected to reflect
underlying production dynamics in each industry based on changes in per-capita GDP (See
Annexure-I for Real GDP growth rates and population projections).
A saturation-growth (logistic S-curve) is used for stock-building materials — steel,
cement, aluminium, and textiles – in which per-capita use rises with development
and then plateaus. Per-capita demand is modelled as:
????????????????????????
????????????
(????????????????????????−????????????)
=????????????∗????????????????????????(
????????????????????????????????????
????????????????????????????????????????????????????????????????????????
)+????????????
Where:
S = per capita industrial demand
So = saturation limit
a,b = coefficients estimated from historical data
Saturation limits are calibrated to global benchmarks and India’s long-run stock needs for
housing, infrastructure, and capital goods.
A regression-based model is applied where demand follows measurable drivers rather than
stock saturation, as in the case of fertilisers, chemicals (ethylene), chlor-alkali (soda ash,
caustic soda), paper and pulp, and “other industry.” A simple per-capita specification used
in this report is:
????????????=????????????∗(
????????????????????????????????????
????????????????????????????????????????????????????????????????????????
)+????????????
Where:
S = per capita industrial demand
m, c = coefficients estimated on historical data Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 62
Industry Sector Modelling and Results
Energy and Emission Estimation
Each sub-sector is then mapped to its prevailing technology pathways, associated specific
energy consumption, and fuel consumption patterns. This includes categorisation into thermal
and electrical energy demands (further divided into grid and captive), and identification of
primary fuels such as coal, natural gas, electricity, and renewable sources. Energy demand is
calculated by multiplying the estimated production volumes by technology-specific Specific
Energy Consumption (SEC) in Gigajoules (GJ) or Tonnes of Oil Equivalent (toe) per tonne.
Further, industry sector emissions are estimated using IPCC Tier 2 or Tier 3 methodologies and
are attributed to a combination of sources, including:
1. Energy Emissions
a. Fuel-Related Emissions: Emissions resulting from the combustion and utilisation of
fuels (both fossil and non-fossil sources) at industrial facilities for applications other
than electricity generation, such as for producing process heat or steam.
b. Electricity Generation Emissions: Emissions associated with the production of
electricity consumed by industrial facilities, whether the electricity is generated onsite
or procured from the grid.
2. Industrial Processes and Product Use (IPPU) Emissions
Emissions arising directly from chemical or physical transformations of material in industrial
activities and product use, rather than from fuel consumption for energy. Typical examples
include the process CO
2
released during clinker production in the cement industry, the reduction
reaction in iron and feedstock or process emissions in chemical and fertiliser manufacturing.
The modelling outputs include emissions of CO₂, CH₄, and N₂O, CF4, C2F6, etc., expressed in
CO₂e terms using the AR5 method for consistency with national inventory reporting.
Scenarios
The pace and shape of India’s industrial sector energy transition will be driven by policy choices,
technology deployment rates, and structural shifts in the economy over the coming decades.
To reflect this complexity and explore a range of plausible pathways, this study develops two
distinct scenarios for the industry sector: the Current Policy Scenario (CPS) and the Net Zero
Scenario (NZS).
Current Policy Scenario (CPS): The CPS represents a continuation of existing policies and
initiatives, reflecting the current pace of technology deployment, regulatory enforcement, and
voluntary industry efforts. It assumes gradual improvements in energy efficiency, moderate
fuel diversification, and incremental uptake of cleaner technologies within the prevailing policy
landscape.
Net Zero Scenario (NZS): The NZS outlines a transformative and more ambitious pathway
aligned with India’s commitment to reach Net Zero GHG emissions by 2070. It assumes proactive
policy interventions, accelerated innovation, and a system-wide shift toward electrification, low-
carbon fuels, circular economy principles, and carbon capture technologies. This scenario is
shaped by the long-term NZ goal and supported by global best practices. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 63
Industry Sector Modelling and Results
While carbon capture, utilisation and storage (CCUS) is recognised as a critical enabler for
achieving Net Zero in hard-to-abate industrial sectors, CCUS is not embedded as a baseline
technology within the sectoral technology mix. Instead, the model estimates the magnitude of
carbon capture required to close the residual emissions gap in the Net Zero Scenario, and these
requirements are analysed separately and discussed under overall industry results.
The next sections present sub-sectoral modelling results under the Current Policy Scenario (CPS)
and Net Zero Scenario (NZS), covering demand projections, technology pathways, energy use,
emission intensity, and investment needs, while sectoral landscapes and energy consumption
profiles can be referred from Chapter 2.
3.2 RESULTS FOR INDUSTRY SUB-SECTORS
3.2.1 Steel
Projections for Crude Steel Production
Crude steel production is projected using a saturation-growth model as described in Section 3.1,
wherein per capita steel consumption rises with income until saturating at a high level. India’s
low current per-capita steel use underscores the scope for growth in comparison to other
economies. For example, at around 97.7 kg/capita in 2023-24, India’s steel consumption is one-
third of the global average and only ~20% of the level seen in advanced economies (Ministry
of Steel, 2025; Climate Policy Initiative, 2023).
As India industrialises, steel demand is expected to increase rapidly by mid-century, after which
the growth is expected to slow down. This mirrors the pattern seen in other industrialised
nations (See Figure 3.2). Using a logistic S-curve with an assumed saturation around 450 kg/
capita (peak levels observed in developed economies), India’s total crude steel production
is projected to rise from 144.29 Mt in 2024 to 624 Mt by 2050 and 821 Mt by 2070 (see
Figure 3.3). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 64
Industry Sector Modelling and Results
700
600
500
400
300
200
100
0
10000
India
Brazil
World Average
Russia
China
EU
Germany
USA
020000 30000 40000 50000 60000 70000 80000
GDP per capita, PPP (constant 2021 international USD)
Steel use per capita (kg)
Figure 3.2: Global comparison of GDP/capita vs steel use/capita
900
800
700
600
500
400
300
200
100
0
2020202420502070
Million Tonne
Figure 3.3: Crude steel production (million tonnes) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 65
Industry Sector Modelling and Results
Scenarios
Two scenarios are developed to assess low-carbon transition pathways for the steel sector:
Current Policy Scenario (CPS) and Net Zero Scenario (NZS) (as described in Table 3.1). Both
scenarios assume similar growth in steel production but differ fundamentally in their assumptions
on technology mix, energy efficiency, fuel use, source of electricity, and scrap utilisation, which
are tabulated below:
Table 3.1: Scenario assumptions for steel sector
Current Policy ScenarioNet Zero Scenario
Technology
Mix
Dominance of Blast Furnace &
Basic Oxygen Furnace (BF-BOF)
till 2050, beyond which annual
capacity addition reduces
DRI (Gas)-EAF to be transition
technology
DRI (Hydrogen)-EAF
Commercialisation starts from
2035, and scale comes only after
2045
DRI(Coal-IF): No addition after
2030
Dominance of Blast Furnace
& Basic Oxygen Furnace (BF-
BOF) till 2040 and no new
addition after 2060; BF-BOF
capacity that remains in 2070 is
coupled with CCS/CCUS
DRI (Gas)-EAF to be transition
technology; No capacity
addition after 2040
DRI (Hydrogen)-EAF
commercialisation starts from
2030 with significant scale
emerging from the 2040s.
DRI(Coal-IF): No addition after
2030
Specific
Energy
Consumption
(SEC)
Overall, SEC declines by roughly 12% by
2050 and about 23% by 2070 versus
2025, driven by changes wherein average
SEC catches up with India’s best plants
as of today.
Overall, SEC falls by around 24%
by 2050 and approximately 35-38%
by 2070 relative to 2025, driven by
changes wherein average SEC catches
up with global best plants as of today.
Share of
Grid/Captive
Share of captive: 64% (2025) to 56%
(2050) and 50% (2070), reflecting
conservative views wherein the industry
adds significant fossil capacity to meet
the electric needs reliably.
Share of captive: 64% (2025) to 48%
(2050) and 35% (2070), reflecting a
gradual increase towards the use of
Grid, which is assumed to be low-
carbon and reliable.
Fuel Mix
for Captive
Power
Coal-based generation: 93% (2025) to
53% (2050) and 40% (2070), wherein
coal continues to be the dominant source
owing to reliability concerns.
Coal-based generation: 20% (2050) and
phased out by (2070) due to priority
shift towards renewables and captive
nuclear driven by ambitious targets
through CCTS, tightening of taxonomy
thresholds and decline in storage costs
for deploying RTC renewables.
Scrap Share Remains the same at the current level
of 20% in 2025 as the ecosystem for
Circularity improves gradually
Improves from 20% in 2025 to 30%
by 2050 and 40% by 2070 with an
enabling ecosystem for circularity
through strong EPR policies, minimum
recycled content norms and a
formalised value chain. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 66
Industry Sector Modelling and Results
Results
Energy Demand: To meet a nearly sixfold increase in steel production, from 144 Mt in 2024
to 820 Mt in 2070, final energy consumption is projected to rise from 69 Mtoe in 2025 to
251 Mtoe in 2070 (3.6x) under Current Policy Scenario (CPS) and to 155 Mtoe under Net
Zero Scenario (NZS) (2.2x) (see Figure 3.4). Despite the significant scale-up in production,
energy intensity improves even under CPS due to energy efficiency gains, gradual penetration
of newer technologies such as Green H
2
, and increased use of renewable energy. In the NZS,
wider adoption of efficiency measures, higher scrap utilisation, phase-out of energy-intensive
processes such as coal-based DRI, and greater use of low-carbon fuels result in final energy
demand being about 38% lower than under CPS. Notably, after 2050, NZS shows a flattening
of energy demand even as production continues to grow. These trends align with global Net
Zero roadmaps (IEA, Mission Possible Partnership), which indicate that steel sector energy use
plateaus or declines after mid-century as a result of transformative technological changes.
Technology and Fuel Mix: By 2070, the nature of steel production under the Net Zero Scenario
fundamentally differs from the present. The NZ pathway is dominated by low-carbon routes,
with approximately 40% of output from scrap-based EAF and around 50% from GH
2
DRI–
EAF, leaving only about 10% from coal-based BF–BOF equipped with CCS. In contrast, under
Current Policy Scenario (CPS), BF–BOF remains the single largest route, supplying around 50%
of production in 2070, with hydrogen DRI–EAF (25%), NG DRI–EAF (7%), and scrap-based
EAF (18%) comprising the balance. The divergence in technology pathways is already evident
in 2050, when Net Zero Scenario shows a pronounced shift towards hydrogen DRI–EAF and
higher scrap shares, while Current Policy Scenario (CPS) continues to be reliant on BF-BOF
capacity.
300
250
200
150
100
50
0
Grid electricityCaptive ElectricityGasCoalGH
2
202020252050
CPSCPSNZSNZS
2070
Mtoe
Figure 3.4: Final energy consumption in steel sector (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 67
Industry Sector Modelling and Results
Million Tonne
NG DRI-EAF Coal DRI-IF Hydrogen DRI-EAFCoal DRI-EAFBF-BOFScrap
900
800
700
600
500
400
300
200
100
0
2020 20252050
CPSCPSNZSNZS
2070
Figure 3.5: Technology-wise steel production (million tonnes) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
This shift in technology mix directly drives the transformation of the fuel profile (see Figure
3.5). The evolution of fuel mix under the Current Policy Scenario reflects a continuation of the
coal-centric production pathway. The combined use of coking and non-coking coal (excluding
non-coking coal used for electricity generation) under this scenario rises from 55 Mtoe in 2025
to ~160 Mtoe by 2070, supplying most of the sector’s energy. Electricity also sees growth from 9
Mtoe in 2025 to ~41 Mtoe by 2070, with a high EAF share; however, captive electricity is largely
from the coal route. Under Net Zero Scenario, total coal use falls sharply to 26 Mtoe by 2070,
confined mainly to residual BF-BOF capacity equipped with CCS. Green hydrogen becomes
a core energy carrier, reaching 81 Mtoe (over 50% of final energy). In parallel, captive clean
electricity from renewables and nuclear expands to about 17 Mtoe. By 2070, Net Zero Scenario
is dominated by hydrogen and low-carbon captive power, with fossil fuels playing only a residual
role broadly consistent with IEA Net Zero 2050 and Mission Possible Partnership pathways,
which envisage roughly half of steel energy from hydrogen and a steep reduction in coal use.
0
0.5
1
1.5
2
2.5
CPS NZS CPS NZS
2020 202520502070
tCO
2
/t
Figure 3.6: Emission intensity of steel sector (tCO
2
/t) under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 68
Industry Sector Modelling and Results
Emission Intensity: Emission intensity in both scenarios declines over time (Figure 3.6), but
the depth of reduction differs markedly, with the Net Zero Scenario reflecting an ambitious
decline compared to Current Policy Scenario (CPS). In CPS, emission intensity reduces by 44%
in 2050 and 62% by 2070 over 2.54 tonnes CO
2
/tonne of crude steel in 2025. However, in Net
Zero Scenario, emission intensity declines by 74% by 2050 and 95% by 2070, driven by a shift
towards low-carbon sources.
These outcomes illustrate how technology and fuel shifts translate into a deep reduction in
emissions intensity, and underscore the need for strong policy, investment, and infrastructure
support. The key barriers and enablers shaping this transition are outlined below.
Barriers and Enablers for Steel Sector Energy Transition
Challenges
a. Low-grade iron ores: Of India’s 24,058 Mt of hematite reserves, only 12% is high-
grade, 31% low-grade, and the rest medium (Ministry of Steel, 2024). Heavy reliance
on low-grade ore generates more slimes and fines, cutting plant efficiency and
raising emissions, while mining and crushing also cause iron losses.
b. Heavy reliance on BF-BOF: Current steel production depends heavily on the BF-BOF
route, which accounted for 44% of the crude steel production in 2021-22, compared
to 30% globally (IEA, 2020). Producing steel through this route is heavily coal-
dependent and carbon-intensive, with the Indian average at 2.36 tCO₂/tcs, while
globally, it ranges between 1.85 and 1.91 tCO₂/tcs. (Elango et al, 2023) (Ministry of
Steel, 2024).
c. High cost of new technologies: 100% hydrogen DRI-EAF has yet to be cost-
competitive at current hydrogen prices. Global studies show that hydrogen-based
DRI plants require around 30-40% higher capital investment cost and 15-25% higher
operating costs, assuming current green hydrogen prices (Eureka 2025).
d. CCUS technologies: embedded within the steel units can reduce 56% of the BF-BOF
emissions but cost between 45-60 USD/tCO₂ (Ministry of Steel, 2024). Moreover, for
CCUS technologies to succeed in India, pipeline networks and storage infrastructure
need to be built up. In 2025, Indian steel emits about 2.1 tCO₂/tcs (estimated), higher
than among global peers, leaving Indian steel vulnerable to CBAM kind of policies.
e. Availability of raw materials: Around 30 Mt of scrap was produced in 2020-21, well
below the requirement (PIB, 2023). Decarbonising steel will need to ensure a high
scrap mix in overall steel production.
f. Lack of global steel taxonomy: While India is the first to have a green steel taxonomy
in place, global standards will help harmonise emissions per tcs and increase demand
globally for low carbon steel (PIB, 2024)
g. Lack of willingness to pay green premium for steel: India’s price-sensitive market
shows limited readiness to pay more for low-carbon or “green” steel. This weak
demand signal discourages producers from making large investments in low-carbon
technologies and capacity upgrades Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 69
Industry Sector Modelling and Results
Suggestions
a. Scale up Electric Arc Furnace (EAF) route with a dedicated scrap policy: Scaling up
EAF will require a dedicated and robust framework for Scrap Policy that goes beyond
vehicle scrappage policy and includes segregation networks, formal scrap collection
targets, digital information of the scraps used, and a certification mechanism for
quality assurance.
b. Thermal Energy Management: Deepen specific thermal energy consumption targets
under CCTS, to promote adoption of technologies such as Coke Dry Quenching
(CDQ) & Top Gas Recovery Turbines (TRT) to recover pressure/heat
c. Blending hydrogen in BF-BOF: The transition plan should be to blend hydrogen in
BF-BOF plants through retrofitting in existing plants. In 2023, Tata Steel set up a
trial project to inject 40% hydrogen gas in the ‘E’ Blast Furnace in Jamshedpur, with
the potential to reduce 7-10% CO
2
per tonne of steel (Tata Steel, 2023).
d. Green route: GH
2
-DRI EAF route is the long-term solution to decarbonise the
steel industry. To improve the cost competitiveness of steel from this route, the
National Green Hydrogen Mission should bring in mechanisms to move from pilots
to commercial-scale projects leveraging blended financial structures.
e. Better use of low-grade iron ore: Beneficiation process needs to be promoted as
the efficient technology route for better utilisation of low-grade ore, especially by
Integrated Steel Plants (ISPs).
f. Incentivise green public procurement: The government should deploy Green
Public Procurement (GPP) to create early domestic demand for low-carbon steel in
infrastructure projects.
g. Harmonisation of Indian Steel Taxonomy: Aligning Indian definitions of “green steel”
with international taxonomies will safeguard competitiveness in global markets.
3.2.2 Cement
Projections for Cement Production
Cement production in India is projected using a logistic saturation model linked to economic
growth, following the methodology outlined in Section 3.1. Historically, per-capita cement
consumption in developed economies rose steeply during early phases of rapid infrastructure
and housing expansion, and gradually plateaued as economies matured. India is currently in this
accelerated growth phase of the S-curve. Figure 3.7 correlates per-capita cement consumption
with per-capita GDP, benchmarked against the experience of other large industrialising
economies.
Using this approach, India’s total cement production is projected to increase sharply through
mid-century before stabilising. Cement production is projected to increase from 451 Mt in 2025
to 1,590 Mt by 2050, and then gradually level off around 1,985 Mt by 2070 (see Figure 3.7).
This represents more than a threefold increase by 2050, driven by sustained demand from
housing, urban infrastructure, industrial corridors, transport networks, and supported by major
national programs such as Pradhan Mantri Awas Yojana (Housing for All), Smart Cities Mission,
Bharatmala and Sagarmala. The demand slightly tapers in the later period, with a 4.5x increase
by 2070 over 2025 levels. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 70
Industry Sector Modelling and Results
1800
1600
1400
1200
1000
800
600
400
200
0
10000020000 30000 40000 50000 60000 70000 80000
GDP per capita, PPP (constant 2021 international USD )
Cement per capita consumption (kg)
India
Vietnam
China
World Average
Brazil
Russia EU
Korea
Germany
USA
Figure 3.7: Global comparison of GDP/capita vs cement use/capita
Million Tonne
2000
1500
1000
500
0
2020202520502070
Figure 3.8: Cement production (million tonnes)
Scenarios
Two scenarios are examined for the cement sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption and
emission-mitigation ambition (See Table below) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 71
Industry Sector Modelling and Results
Table 3.2: Scenario assumptions for cement sector
Current Policy ScenarioNet Zero Scenario
Clinker Ratio Average clinker-to-cement
ratio declines moderately
from about 0.67 in 2024
to 0.6 by 2070, reflecting
gradual improvements and
no additional new binder
chemistries.
Average clinker-to-cement ratio falls to
0.55 by 2070, global best. This scenario
envisages large-scale deployment of low-
clinker binders such as LC3 (limestone
calcined clay cement), agro-residue ash,
and construction-and-demolition waste
powders, extending beyond traditional fly
ash/slag.
Carbon Capture,
Utilisation and
Storage (CCUS)
Only pilot projects are
considered because of the high
cost and limited policy support.
CCUS is deployed at scale from the 2040s
onward, capturing process CO₂ from large
kilns by 2070.
Specific Energy
Consumption (SEC)
In the context that Cement
plants in India are among
the global best, only 2%
improvement is considered
facilitated through increased
use of Waste Heat Recovery.
This scenario envisages 8% improvement
in SEC enabling through the deployment
of advanced precalciner designs, full
WHR coverage, oxy-fuel kilns, and digital
optimisation. Electrical efficiency also
improves via high-pressure grinding rolls
and vertical mills.
Share of Captive/
Grid
Share of captive: 52% (2025)
to 50% (2070), reflecting
conservative views wherein
the industry adds significant
captive fossil capacity to meet
the electric needs reliably.
Share of captive: 52% (2025) to 34%
(2050) and 20% (2070), reflecting a
gradual increase towards the use of Grid,
which is assumed to be low-carbon and
reliable.
Captive Fuel Mix Coal-based generation: 90%
(2025) to 52% (2050) and 40%
(2070), wherein coal continues
to be the dominant source
owing to reliability concerns.
Coal-based generation: 20% (2050) and
phased out by 2070 due to priority shift
towards renewables driven by ambitious
targets through CCTS, tightening of
taxonomy thresholds and decline in storage
costs for deploying RTC renewables.
Results
Energy Consumption: The cement sector’s final energy demand increases substantially in both
scenarios as clinker and cement output grow. Total final energy use rises from about 27 Mtoe
in 2025 to around 86 Mtoe in 2050 and 98 Mtoe in 2070 under Current Policy Scenario, and 81
Mtoe in 2050 and 89 Mtoe in 2070 under Net Zero Scenario (see Figure 3.9). This represents
a less than four times increase under the CPS and around three times increase under the NZS
relative to 2025, with savings in the latter scenario coming from deeper efficiency gains, lower
clinker ratios and higher use of supplementary cementitious materials. The difference in total
energy consumption between CPS and NZS is modest, as both scenarios still require high-
temperature kilns, so even a highly decarbonised cement system remains energy-intensive. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 72
Industry Sector Modelling and Results
100
80
60
40
20
0
Grid electricity Captive ElectricityCoal Natural Gas Pet-cokeBiomass
Mtoe
2020 2025
CPS
2050
NZSCPS
2070
NZS
Figure 3.9: Final energy consumption in cement sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
By 2050, both scenarios show a gradual shift away from pure fossil fuels, but with very different
end states by 2070. Under Current Policy Scenario (CPS), coal and petcoke continue to dominate
the fuel mix, providing around 79% of total final energy in 2050 and about 74% in 2070 Vs 85%
in 2025, with biomass and other alternative fuels playing a supporting role. Biomass would grow
to only about 13% of final energy by 2070, while grid and captive electricity together would
account for roughly 13%, mainly for grinding and auxiliaries. This pathway implies that most kilns
would still run on conventional fossil fuels, with alternative fuels constrained by waste-supply
logistics, quality issues, and weak policy push.
Under the Net Zero Scenario, the fuel structure is assumed to change in a transformative
manner. By 2050, coal and petcoke’s share of final energy would fall to about 62%, with biomass
providing roughly 25%, and the remainder from electricity and a small share of gas. By 2070,
biomass would contribute nearly 39%, while coal and petcoke’s share drops to 46%. Electricity
would supply close to 14% of final energy enabled by electrified equipment and CCUS systems.
This shift to clean fuels is mirrored in the captive power mix under Current Policy Scenario,
captive electricity in 2070 is projected to be about 60% coal-based and the remaining 40%
RE-based. Under NZS, captive supply becomes majority non-fossil by 2050 (only 20% coal)
and is fully non-fossil-based (including nuclear) by 2070.
These patterns imply that NZS requires not only technology change inside the plant (low-clinker
binders, CCUS-ready kilns) but also robust waste and biomass supply chains, co-processing
infrastructure, and coordination with the power sector to deliver firm low-carbon electricity.
Emission Intensities
Emissions intensity declines over time in both scenarios, but with a deeper reduction projected
under the Net Zero Scenario (NZS). In Current Policy Scenario (CPS), intensity is projected to
fall by 10% in 2050 and by 21% in 2070 from 0.61 tCO₂/t cement in 2025 (see Figure 3.10). Under Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 73
Industry Sector Modelling and Results
NZS, emission intensity is projected to fall by 26% by 2050 and 39% by 2070 as compared
to its value in 2025, reflecting the combined impact of lower clinker ratio and higher share of
clean fuels. Remaining emissions (majorly process emissions) in NZS will be captured through
carbon capture technologies to achieve full decarbonisation of the sector.
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
tCO
2
/tonne
2020 20252050
CPSCPSNZSNZS
2070
Figure 3.10: Emission intensity of cement sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Barriers and Enablers for Cement Sector Energy Transition
Challenges
a. High dependency on conventional fuels: for its thermal energy needs, as the
clinker calcination process requires high-calorific-value fuels capable of sustaining
consistently high kiln temperatures. In 2020-21, these fuels accounted for ~95% of
the energy demand in the production process (GCCA India-Teri, 2025).
b. High process emissions: The calcination process to produce clinker alone contributes
to 57-60% of the total emissions, followed by process heating accounting for 27-
30% (GCCA India-Teri, 2025). International experience shows that The capture cost
of cement plants is around USD 60-110 per tonne of CO
2
avoided (IEAGHG, 2019).
c. Limited adoption of new technologies: Existing Indian plants based on older rotary
kilns have higher energy intensity, and with very limited adoption of new technologies
like waste heat recovery systems (WHR) or pre-heaters for increasing efficiency.
Only 70% large cement plants out of 250 have WHR systems installed (EPCWorld,
2021). The challenge includes higher capital cost for smaller capacity plants and a
lack of financial incentives.
d. Limited financing availability: Depending on the WHR potential and the type of
technology adopted, the current installation cost stands at USD 1.4- 1.5 million per
MW in India (Mercomindia, 2023). Even emerging options such as carbon capture,
utilisation and storage (CCUS) remain very expensive. Significant capital will therefore
be required to support the low-carbon transition, including kiln electrification,
green-hydrogen-based kilns, pre-processing of low-carbon alternative fuels, and the
processing of new clinker substitutes or novel binders. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 74
Industry Sector Modelling and Results
Suggestions
a. Scale up alternative fuels: Creating a dedicated supply chain of segregated waste
for replacing coal and petcoke can encourage the adoption of waste-derived fuels
from municipal solid waste, plastic wastes, used tyres and industrial wastes.
b. Incentivise WHR: Incentivise adoption of WHR through recognition of WHR under
Renewable Consumption Obligations (RCOs).
c. Green Public Procurement (GPP) for infrastructure projects: Introducing GPP
for infrastructure projects can create an assured demand for low-carbon cement
products such as LC3.
d. Harmonisation of Cement Taxonomy: Aligning proposed Indian definitions of “Low-
carbon cement” with international taxonomies will safeguard competitiveness in
global markets.
e. CCUS: To address unavoidable process emissions in this sector, CCUS may
be prioritised, beginning with large modern plants, and supported by shared
infrastructure, targeted incentives, and robust regulatory frameworks.
3.2.3 Aluminium
Projections for Aluminium Production
Aluminium production in India is projected using a saturation-growth model, consistent with
the methodology described in Section 3.1, and analogous to projections for other stock-driven
materials such as steel and cement. Historically, per-capita aluminium consumption has increased
with income and industrialisation, and then plateaued as economies matured. In this study,
the model correlates historical aluminium use with per-capita GDP and applies high-income
benchmarks to define the saturation levels.
India’s per capita aluminium consumption is currently around 3–4 kg, compared to the global
average of 11-13 kg and China’s 25-30 kg, indicating vast headroom for growth (Aluminium
Extrusion Manufacturers Association India, 2025).
50
40
30
20
10
0
200004000060000800000
India
China
Korea
Germany
USAFrance
Japan
Aluminum consumption per capita (kg)
GDP per capita, PPP (constant 2021 international USD )
Figure 3.11: Global comparison of GDP/capita vs aluminium use/capita Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 75
Industry Sector Modelling and Results
Million Tonne
40
35
30
25
20
15
10
5
0
2020202520502070
Figure 3.12: Aluminium production (million tonnes)
With rising incomes and the push for industrialisation through Make in India and PLI schemes,
aluminium-intensive sectors such as power, infrastructure, transport (EVs, rail, aviation),
construction, packaging, and consumer durables are expected to grow. Aluminium demand
is accordingly expected to grow steeply and then gradually taper by mid-century. Modelling
results suggest that per-capita consumption could reach ~23–24 kg by 2070. With this, the
total aluminium production in India is projected to reach around 38 million tonnes by 2070
(see Figure 3.12).
Growth would be stronger, especially through the next three decades, supported by India’s
industrialisation and programs such as Make in India, PLI schemes, and the expansion of
renewables and electric mobility, all of which are aluminium-intensive. Such growth underlines
the need to plan for corresponding capacity expansion and resource supply (bauxite, power)
or increased imports.
Scenarios
Two scenarios are examined for the Aluminium sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption and
emission-mitigation ambition (See Table below) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 76
Industry Sector Modelling and Results
Table 3.3: Scenario assumptions for aluminium sector
Current Policy ScenarioNet Zero Scenario
Share of Scrap
Share of scrap remains at the 2025
level of 30% through 2070.
Share of scrap is assumed to increase
from 30% in 2025 to 40% by 2070
Anode Technology Remains same
Adoption of inert anodes leading to a
deep reduction in process emissions
Specific Energy
Consumption (SEC)
Improvement of 7.5% over 2025
through a moderate increase in
the use of non-fossil sources for
electricity generation
Improvement of 15% over 2025
through a rapid increase in the use
of non-fossil sources for electricity
generation and reaching global best
efficiency standards
Share of Captive/
Grid
Share of captive: 80% (2025) to 74%
(2050) and 70% (2070), reflecting
conservative views wherein the
industry adds significant captive
fossil capacity to meet the electric
needs reliably.
Share of captive: 80% (2025) to 57%
(2050) and 40% (2070), reflecting a
gradual increase towards the use of
Grid, which is assumed to be low-
carbon and reliable.
Captive Fuel Mix
Coal-based generation: 99% (2025)
to 53% (2050) and 40% (2070),
wherein coal will support the captive
RE owing to reliability concerns.
Coal-based generation: 20% in
2050 and phase out by 2070 due
to the shift towards renewables and
captive nuclear driven by ambitious
targets through CCTS, tightening of
taxonomy thresholds
Results
Energy Demand: While final energy demand rises strongly in both scenarios, its scale and
composition are expected to differ. Under the Current Policy Scenario (CPS), total final energy
use is expected to grow by almost six times from about 7.2 Mtoe in 2025 to 44 Mtoe in 2070.
Under the Net Zero Scenario, it would increase five times relative to 2025, reaching 37 Mtoe in
2070, a reduction of 16% compared to CPS (see Figure 3.13). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 77
Industry Sector Modelling and Results
50
45
40
35
30
25
20
15
10
5
0
Mtoe
Grid electricity
Captive ElectricityCoal Biomass
2020 202020502070
CPSCPSNZSNZS
Figure 3.13: Final energy consumption in aluminium sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
The Net Zero Scenario (NZS) pathway moderates this growth in energy consumption through
stronger efficiency improvements and a higher share of scrap aluminium. Even under the NZS,
aluminium remains one of the most energy-intensive industrial sectors, which implies that its
low-carbon transition would be closely tied to the pace and direction of the power sector’s
transition.
Fuel Mix:
Final energy use in aluminium is already electricity-heavy (73% in 2025) and continues to be
dominant; the key difference is how that electricity is produced. In Current Policy Scenario,
captive power remains dominant, with a significant share of coal. Non-fossil captive power (RE+
BESS) rises to 60% of the captive mix by 2070.
In Net Zero Scenario, electricity sourcing shifts steadily toward cleaner grid and non-fossil-
dominant captive sources. By 2050, around 80% of captive generation is non-fossil (80%
renewables and 20% nuclear), and by 2070, captive power is effectively 100% non-fossil,
split between 70% renewables and 30% nuclear (SMRs). This implies that deep aluminium
decarbonisation is contingent not only on efficiency and scrap, but on securing large volumes
of firm low-carbon power.
Emission Intensity
Emissions intensity is expected to fall in both scenarios, but Net Zero Scenario (NZS) would
deliver far deeper reductions. From an average intensity of 23.5 tCO₂/t aluminium in 2025, the
Current Policy Scenario (CPS) reduces emissions intensity by about 36% by 2050 and around
58% by 2070, while NZS could achieve a 58% reduction by 2050 and around 90% by 2070 (see Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 78
Industry Sector Modelling and Results
Figure 3.14). Achieving the NZS trajectory implicitly requires higher secondary aluminium shares,
deeper efficiency gains, a fully decarbonised captive power mix, and diffusion of low-emission
process technologies (such as inert anodes) to curb non-CO₂ emissions.
Emissions Intensity tCO
2
/tonne
2020 202020502070
CPSCPSNZSNZS
25
20
15
10
5
0
Figure 3.14: Emission intensity of aluminium sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Barriers and Enablers for Aluminium Sector Energy Transition
Challenges
a. Depleting high-grade bauxite ore: Given the shortage of bauxite ore, India needs to
look towards other available resources such as aluminium laterites, high silica and high iron
bauxites, which require additional processing for the production of alumina (Nandi, 2025).
b. Challenges for bauxite sourcing: A significant portion of India’s bauxite reserves lies
in indigenous community areas in Odisha, Jharkhand, and Chhattisgarh. Mining raises
livelihood issues.
c. Emission intensive: The aluminium sector in India has a higher emission intensity of
23.5 tCO₂ per tonne, far above the global average of ~16 tCO₂/t due to coal-dependent
electricity generation.
d. Low recycling rate: India’s recycling rate for aluminium products is around 25%, well
below the global average of around 60% (Shashikala, 2019).
e. Import duty disparity: The import duty on aluminium scrap is currently 2.5%, while it
is 7.5% for the primary metal. This makes imported scrap attractive, which subsequently
restricts local recycling (NITI Aayog, 2018).
f. Retrofitting or replacing carbon anodes: with inert ones is 9% more expensive than
conventional approaches (WEFORUM 2023). Inert anode technology is still at the pilot
stage.
Suggestions
a. Promote low-carbon, reliable electricity supply: Promoting a mix of RE + Storage
and Nuclear to ensure reliable power. The cost differentials need to be addressed
through specialised project structuring like use of Blended finance, Contract for
Differences (CfD), and Joint Ventures with Technology developers. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 79
Industry Sector Modelling and Results
b. Revise taxation/duty rules: to promote the domestic recycling industry.
c. Reuse waste and by-products: from aluminium production by promoting industrial
symbiosis- 1 tonne of aluminium production results in 2-3 tonnes of bauxite residue
and 2-5 tonnes of coal ash. These products can be utilised as feedstocks for cement
production and as construction material (Banerjee, 2017). Incentivising the offtake
of aluminium waste products may promote industrial symbiosis.
3.2.4 Textile
Projections for Textile Production
Future textile production in India is projected using a saturation-growth model, consistent with
the methodology described in Section 3.1. Historically, per-capita textile consumption rises with
income and urbanisation, then levels off as wardrobes saturate and lifestyles stabilise. For India,
the model links historical fibre uses to per-capita GDP and applies international benchmarks to
define long-run saturation levels. India’s current per-capita textile consumption is only 5 kg per
year, compared with 15 kg globally, indicating substantial potential for growth (Gupta, 2025).
As incomes rise, urbanisation deepens, and apparel and technical textile segments expand,
total fibre production is projected to increase from around 8 million tonnes (Mt) in 2020 to 53
Mt by 2050 and 61 Mt by 2070 (see Figure 3.15). While the demand increases by 8 times by
2070, the product mix is likely to tilt more towards technical and MMF-based textiles, altering
energy profiles (more electricity-intensive processes) and increasing the importance of reliable,
low-carbon power.
70
60
50
40
30
20
10
0
2020202520502070
Million Tonne
Figure 3.15: Textile sector production (million tonnes)
Scenarios
Two scenarios are examined for the Textile sector: the Current Policy Scenario (CPS) and the
Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption and
emission-mitigation ambition (See Table below) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 80
Industry Sector Modelling and Results
Table 3.4: Scenario assumptions for textile sector
Current Policy ScenarioNet Zero Scenario
Share of MMF
vs Natural
Fibres (Cotton
Dominant)
Share of MMF is expected to improve from 27% in 2023 to 70% by 2070, driven
by the government’s dedicated technical textiles mission and evolving consumer
preferences. This shift also aligns with the global fibre mix, where MMF account for
almost 72% in 2022.
The projections also account for land constraints, especially for growing cotton,
and assume that average cotton yield will also improve by three times from 450-
500 kg/ha (China's current yield: 2172 kg/ha in 2024)
Specific
Energy
Consumption
(SEC)
Improvement of 20% over 2025 through
incremental upgrades in MSMEs and
gradual diffusion of efficient motors,
improved controls, and better steam/
heat management
Improvement of 27% over 2025 through
broader deployment of best-available
technologies (VFDs, efficient looms, low-
liquor dyeing, heat recovery, and digital
process optimisation)
Electrification
of the Thermal
Process
Limited electrification of thermal
processes and continued reliance on
steam boilers
Accelerated electrification through the
use of heat pumps and electric boilers
supported by policy incentives and
stricter emissions standards.
Share of
Captive/Grid
Share of captive: 35% (2025) to 32%
(2050) and 30% (2070), reflecting
conservative views wherein the industry
adds significant captive fossil capacity
to meet the electric needs reliably.
Share of captive: 35% (2025) to 26%
(2050) and 20% (2070), reflecting
a gradual increase towards the use
of Grid, which is assumed to be low-
carbon and reliable.
Captive Fuel
Mix
Coal-based generation: 80% (2025) to
50% (2050) and 40% (2070), wherein
coal continues to be the dominant
source owing to reliability concerns.
Coal-based generation: 20% (2050)
and 0% (2070) due to a priority shift
towards renewables driven by a decline
in storage costs for deploying RTC
renewables.
Results
Energy Consumption: Final energy consumption in the textiles sector is projected to rise strongly
in both scenarios as fibre demand grows and processing volumes expand. Total final energy use
increases from about 7.8 Mtoe in 2025 to 5.4 times under Current Policy Scenario (CPS) versus
4.5 times under Net Zero Scenario (NZS) by 2070 (see Figure 3.16). The NZ pathway moderates
this growth through sector-specific efficiency measures, faster modernisation of MSME clusters,
wider adoption of best-available spinning and weaving machinery, and process innovations in
wet processing such as dope-dyed MMF (which avoids conventional dyeing), low-liquor and
foam dyeing, and emerging supercritical CO₂ dyeing technologies that sharply cut steam and
water use. In addition, greater recovery of waste heat from stenters and thermic fluid heaters,
and gradual electrification of drying/finishing, reduce thermal energy demand per kg of fabric.
Fuel Mix: Under the Current Policy Scenario (CPS), coal remains the backbone of thermal
energy and captive power. In 2050, coal continues to provide about 38% of total final energy
(vs 40% in 2025), with 14% biomass supplementing it. By 2070, coal would supply around 36%,
and the biomass share is projected to rise to 17%. In Net Zero Scenario (NZS), the thermal mix
shifts decisively towards low-carbon sources. By 2050, coal’s share in total final energy falls
to 29%, while biomass rises to 28%. By 2070, coal is fully eliminated from both direct thermal
use and captive generation, with biomass supplying more than half of total final energy, and
electricity remaining, with captive power being 100% RE. This implies that textile low-carbon Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 81
Industry Sector Modelling and Results
transition hinges on scaling up reliable biomass supply chains, RE for clusters, and shared
modern boiler/steam infrastructure to serve MSME units.
45
40
35
30
25
20
15
10
5
0
Mtoe
2020 202020502070
CPSCPSNZSNZS
Grid electricityFuel oil Non-coking coalCaptive ElectricityBiomass
Figure 3.16: Final energy consumption in textile sector (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
Emission Intensity: Under the Current Policy Scenario (CPS), emissions intensity reduces by
around 41% by 2050 and about 66% by 2070 over 2025 levels. Under Net Zero Scenario (NZS),
the reduction reaches 64% by 2050 and effectively 100% by 2070, approaching Net Zero
emissions per tonne of textile output (Figure 3.17). Achieving this NZS trajectory requires the
combined effect of Specific Energy Consumption (SEC) improvements, a complete phase-out of
fossils from process heat and captive power, widespread renewable and biomass deployment in
clusters, while increasing the use of circular and recycled fibres as final textile demand continues
to grow.
6
5
4
3
2
1
0
tCO
2
/tonne
CPSCPS
2050202020252070
NZSNZS
Figure 3.17: Emission intensity of textile sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 82
Industry Sector Modelling and Results
Barriers and Enablers for Textile Sector Energy Transition
Challenges
a. Dependence on fossils for thermal energy: Industrial heat for washing, cleaning
of cotton, bleaching and dyeing primarily comes from fossil fuels (Apparel Impact
Institute 2025)
b. High wastewater generation: Dying and washing processes generate large quantities
of wastewater (Holkar et al. 2016).
c. Capital and technology gaps in fragmented SMEs: India’s textile sector consists
largely of numerous small and medium enterprises (SMEs). These dispersed units
often struggle to access affordable finance, acquire modern energy-efficient
machinery, and keep pace with emerging low-carbon technologies and best practices
d. Low adoption of advanced dyeing and finishing technologies: Equipment such as
digital/ink-jet printing and automated process controls is not commonly adopted,
especially by older mills, leading to excessive energy and water use compared with
best-practice benchmarks (Rahaman, 2024).
e. Skill gap in the sector: A large share of India’s textile and apparel MSMEs lack the
technical skills and capabilities for low-carbon transition, circular-economy practices,
and ESG reporting, limiting their ability to adopt low-carbon technologies and access
green finance (SwitchAsia, 2025).
Suggestions
a. Promote sustainable fibres: through product labelling enabled by digital passports
targeting niche markets
b. Scale ADEETIE scheme:
using ESCO/RESCO models, ADEETIE can bundle interest
subvention, energy audits, DPRs, and M&V to deliver priority retrofits (e.g., heat pumps,
variable-speed drives, waste-heat recovery) and on-site clean power with low upfront costs.
c. Develop an electrification map: linking temperature ranges, processes, and available
electrification technologies.
d. Promote circularity in the textile industry: The textile industry generates tonnes of
waste 7,793 kt annually (Recircle, 2025). Part of the projected demand can be met
by recycled fibres, incentivised through product labelling and expanding the EPR
framework, including setting recovery targets.
e. Develop Lifecycle repository and Product Category rules: to de-risk India’s exports
from emerging global developments, such as EcoDesign for Sustainable Product
Regulations by the EU.
3.2.5 Paper and Pulp
Projections for Paper and Pulp Production
To project future demand, a statistical relationship is developed between per capita paper
demand and GDP per capita. A linear regression model, explained in Section 3.1, is used for
this. The regression parameters are derived from historical data of per capita paper production
and GDP per capita. It is projected that Paper Production will increase with a CAGR of 2.5%
between 2021-22 and 2069-70, reaching about 73 Mt in 2070 (Figure 3.18). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 83
Industry Sector Modelling and Results
RCF-BasedAgro-BasedWood-Based
80
60
40
20
0
Million Tonne
Projections for Paper and Pulp Production
Figure 3.18: Projections for paper and pulp production (million tonnes)
Scenario Assumptions:
Two scenarios are examined for the paper and pulp sector: the Current Policy Scenario (CPS)
and the Net Zero Scenario (NZS), which diverge mainly in the degree of technology adoption
and emission-mitigation ambition (See Table below).
Table 3.5: Scenario assumptions for paper and pulp sector
Current Policy ScenarioNet Zero Scenario
Share of Production
using Wood/Agro/RCF
Remains the same as in 2025
across the years (RCF:75%,
Wood:19% and Agro:6%)
Share of recycled fibre improves
moderately by 2070 (RCF:80%,
Wood:17% and Agro:3%)
Specific Energy
Consumption (SEC)
Average efficiency improves
to reach India’s best available
technology
Wood-based: 1,400 kWh/t
(Electrical) and 27.3 GJ/t (Thermal)
Agro-based: 1,200 kWh/t
(Electrical) and 27.3 GJ/t (Thermal)
RCF-based: 600 kWh/t (Electrical)
and 11.3 GJ/t (Thermal)
Average efficiency improves to reach
the global best available technology
Wood-based: 1,000 kWh/t
(Electrical) and 27.3 GJ/t (Thermal)
Agro-based: 1,200 kWh/t (Electrical)
and 27.3 GJ/t (Thermal)
RCF-based: 500 kWh/t (Electrical)
and 11.3 GJ/t (Thermal)
Fuel MixShare of electricity: Improves from
20% (2025) to 38% (2050) and
53% (2070)
Share of biomass: Improves from
16% (2025) to 18% (2050) and
20% (2070)
Share of electricity: Improves from
20% (2025) to 50% (2050) and 75%
(2070)
Share of biomass: Improves from
16% (2025) to 20% (2050) and 25%
(2070) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 84
Industry Sector Modelling and Results
Results
Energy Consumption
Final energy consumption in the paper and pulp sector is projected to rise in both scenarios as
this sector expands. Based on the assumption highlighted above, the final energy consumption
in the paper and pulp industry increases by more than three times from 10.9 Mtoe in 2025
to 33 Mtoe by 2070 in Current Policy Scenario (CPS) (see Figure 3.19). In Net Zero Scenario
(NZS), the rise in energy consumption moderates due to higher electrification and efficiency
improvements, including advanced process control, high-efficiency equipment, waste heat
recovery, and increased use of cogeneration. Total final energy consumption in NZS is projected
to reach 28.5 Mtoe by 2070, a reduction of 14% as compared to CPS.
Fuel Mix
In the Current Policy Scenario (CPS), while the share of clean energy increases, the fuel mix by
2070 remains partially reliant on fossil fuels, with around 30% of total energy consumption still
derived from fossil sources. The share of electrical energy and biomass increases from 17% and
16% in 2023 to 35% and 18% in 2050 and 53% and 20% by 2070. In Net Zero Scenario (NZS),
the industry undergoes a dramatic shift in fuel mix with fossil fuel being eliminated from both
electricity generation and thermal use. Biomass supplies almost 25% of energy consumption,
and the remaining 75% is shifted to electricity. Further, 100% of captive electricity used for
operations is expected to come from renewable-based generation. This implies that low-carbon
transition of the paper and pulp industry will require coordinated development of biomass
supply chains, RE-enabled industrial clusters, increased use of recycled fibre, electrification of
low and medium temperature process via common high-efficiency thermal infrastructure for
MSMEs.
Biomass Non-Coking Coal Electricity
CPSCPS
2050202020252070
NZSNZS
Final Energy Consumption
40
35
30
25
20
15
10
5
0
Mtoe
Figure 3.19: Final energy consumption in pulp and paper sector (Mtoe) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 85
Industry Sector Modelling and Results
Emission Intensity: The emission intensity of paper and pulp industry production is around 1.98
tCO
2
/t in 2025. Under the Current Policy Scenario (CPS), the paper industry remains a significant
source of industrial CO₂ emissions till 2050. However, with the energy efficiency improvement
and increased electrification and biomass penetration, the emission intensity will drop to 1.04
CO
2
/t by 2070, a reduction of 48% from 2025 (Figure 3.20). In the Net Zero Scenario (NZS),
emissions are reduced to near zero by 2070. This is achieved through rapid electrification using
low-carbon electricity, higher improvement in Specific Energy Consumption (SEC) and higher
penetration of cleaner fuel like biomass as compared to Current Policy Scenario.
2.5
2
1.5
1
0.5
0
tCO
2
/tonne
CPSCPS
20502020 20252070
NZSNZS
Emission Intensity
Figure 3.20: Emission intensity of paper & pulp sector (tCO
2
/t) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS)
Barriers and Enablers for Paper and Pulp Sector Energy Transition
Challenges
a. High raw-material costs: Waste paper, imported pulp, and wood chips remain
expensive, forcing producers to raise product prices and face reduced profitability
(Resourcewise 2024)
b. Outdated technologies: Outdated technologies that raise production costs, lower
product quality, increase pollution, and limit economies of scale (GOI 2014).
c. Capital-intensive boiler upgrades: Installing modern recovery boilers requires heavy
capex that many Indian mills cannot easily finance.
d. Unreliable biomass and fibre supply: Competition for agro-residues and plantation
wood, coupled with seasonal availability and transport bottlenecks, makes it hard
for mills to secure consistent low-carbon fuel and certified raw material.
e. Low market demand for eco-labelled paper: Domestic buyers rarely pay more for
Forest Stewardship Council (FSC)-certified or low-carbon paper, lowering incentives
for mills to invest in low-carbon transition. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 86
Industry Sector Modelling and Results
Suggestions
a. Energy efficiency improvement: The pulp and paper industry needs to invest in
energy-efficient technologies such as vacuum blowers, shoe presses, advanced process
controls and monitoring, micro turbines, oxy-fuel lime kilns, waste heat, steam and
condensate recovery, to enhance energy efficiency (IPPTA, 2023). The ADEETIE scheme
can facilitate shift to use of these technologies, and scale can be achieved by deploying
ESCO business models along with use of ADEETIE scheme benefits.
b. Electrification of Steam: use of electric boilers or high-temperature heat pumps to
generate the large volumes of process steam (Joyo 2025). This can be supported by
VGF till TCO parity. For electricity boilers, enable demand aggregation and access to
low-cost RE electricity.
c. Enhance Green Energy from use of Black Liquor: Integrated pulp and paper mills
should increase the solid concentration of black liquor to 72–73 % before firing in
recovery boilers. Higher-solid firing raises the liquor’s calorific value, allowing mills to
generate more renewable steam and electricity (India GHG Program 2016).
3.2.6 Ethylene
Projections for Ethylene Production
Future ethylene production in India in 2047 is projected to reach about 31 million tonnes,
applying a CAGR of 7.4%, observed over the last decade. Beyond 2047, as India’s demand
growth stabilises, ethylene production is assumed to approach saturation and grow at a much
slower rate. As shown in Figure 3.21, total ethylene production in India is projected to reach
approximately 38 million tonnes per year by 2070.
Million Tonnes
45
40
35
30
25
20
15
10
5
0
2020202520502070
Figure 3.21: Projection of ethylene production in India (million tonnes)
Scenario Assumptions Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 87
Industry Sector Modelling and Results
Two scenarios are examined for the Ethylene sector: the Current Policy Scenario (CPS) and the
Net Zero Scenario (NZS), with differences explained in the table below.
Table 3.6: Scenario assumptions for ethylene sector
Current Policy ScenarioNet Zero Scenario
Share of Production
using Naphtha vs
Ethane
Share of Ethane: improves marginally
from 55% in 2025 to 60% by 2070
Share of Ethane: improves from
55% in 2025 to 65% by 2050 and
70% by 2070.
Growing use of ethane-based
production is driven by superior
cost economics, higher ethylene
yields, lower capital requirements,
and a comparatively smaller
carbon footprint
Fuel MixCaptive/Grid electricity: Share of
captive moderately declines from 80%
in 2025 to 50% by 2070. Further,
within captive, from dominantly fossil
in 2025, there will be a gradual shift
towards non-fossil fuels whose share
increases to 60% by 2070.
Captive/Grid electricity: Share
of captive declines from 80% in
2025 to 30% by 2070. Further,
the entire captive power will be
a non-fossil-based electricity
system by 2070.
Results
Based on the assumption highlighted above, the final energy demand for ethylene production
increases by 9 to 11 times from 17 Mtoe in 2025 to 100 Mtoe in Current Policy Scenario and 96
Mtoe in Net Zero Scenario (Figure 3.22). By 2070, the fuel mix for ethylene production in both
scenarios remains predominantly fossil fuel-based due to the essential role of feedstocks in the
production process.
Under the Current Policy Scenario (CPS), naphtha continues to be the dominant input, with
natural gas use projected to increase. Electricity would contribute only a small share, primarily for
operational needs rather than as a major energy source. Under the Net Zero Scenario (NZS), there
is a marked shift from naphtha to natural gas, reflecting a move toward relatively cleaner fossil
fuels. However, despite this shift and the gradual rise in electricity use, fossil fuels would still form
the bulk of the energy mix, driven by the continued dependence on hydrocarbon feedstocks. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 88
Industry Sector Modelling and Results
Fuel Consumption in Ethylene Production
2020 202520502070
CPSCPSNZSNZS
Naptha Grid ElectricityCaptive ElectricityNatural Gas Ethane
Mtoe
120
100
80
60
40
20
0
Figure 3.22: Final energy consumption in ethylene (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Emissions
The emission intensity of ethylene production in India is about 1.91 tCO₂/t in 2025. It includes
both process emissions and energy-related emissions. In this sector, the process emissions
account for more than 60% of the total emissions, which are difficult to mitigate and require
carbon capture technologies. For the balance energy emissions, efforts like shifting fossil-fuel
based thermal energy to electricity-based heat and utilising RE-based power in captive plants
would be required. The emission intensity in Current Policy Scenario (CPS) is projected to reach
1.85 tCO
2
/t of production. Under the Net Zero Scenario (NZS), this would reduce to 1.45 tCO
2
/t
due to greater efforts towards cleaner fuel and clean electricity (Figure 3.23).
Emission Intensity (tCO
2
/tonne)
2020202520502070
CPSCPSNZSNZS
tCO
2
/tonne
2.5
2.0
1.5
1.0
0.5
0
Figure 3.23: Emission intensity of ethylene sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 89
Industry Sector Modelling and Results
Barriers and Enablers for Ethylene Sector Energy Transition
Challenges
a. Dependence on fossil fuels for high-temperature heat: Steam cracking requires
heat exceeding 850°C, traditionally generated by burning fossil fuels (methane/off-
gas) in furnaces, accounting for almost 90% of the process CO
2
emissions.
b. High carbon footprint of feedstocks: The sector relies heavily on fossil-based
feedstocks (naphtha, ethane), which have embedded carbon. Naphtha route emits
around 1.73 tCO
2
while the ethane route emits 0.76 tCO
2
per tonne of ethylene
production, creating a significant carbon lock-in.
c. High capital intensity and asset inertia: Ethylene plants are massive, capital-intensive
assets with long lifespans (30–50 years). Retrofitting these facilities for low-carbon
technologies (like CCUS or e-cracking) requires large capital (WEF, 2024).
d. Technological gaps in electrification scale-up: While electric cracking is a promising
alternative, it faces hurdles in heat management, material durability, and sourcing of
stable green power. Commercial-scale deployment is still in the pilot/early-adoption
phase (360iResearch 2025).
e. Linear consumption and plastic waste: The downstream use of ethylene (polyethene)
generates large-scale plastic waste. India faces significant challenges in segregation
and logistics, with contamination limiting the supply of quality feedstock for recycling
(TERI, 2021).
f. Process emissions and flaring: Beyond energy use, fugitive emissions and flaring
during startup/shutdown contribute to the environmental footprint. CO
2
is also a
byproduct in some reaction pathways, necessitating management.
g. Skill and integration gap: The shift to electric furnaces, hydrogen firing, and circular
feedstocks requires new technical competencies. The current workforce lacks
specialised skills in power electronics and in managing variable bio/waste feedstocks
(ReAnIn, 2024).
Suggestions
a. Switch to renewable process heat (Electrification): Replace gas-fired furnaces
with electric steam crackers (e-crackers) powered by RE to reduce emissions.
(360iresearch 2025; ScienceDirect 2024).
b. Adopt sustainable feedstocks: Transition to bio-naphtha and bio-ethanol (dehydration
to ethylene). Innovations in fermentation have improved yield efficiency by 30%,
making bio-ethylene a viable low-carbon alternative (ReAnIn, 2024). Incentivise
adoption through an assured offtake mechanism.
c. Adoption of advanced separation technologies: Replace energy-intensive distillation
with membrane separation and adsorption technologies for olefin-paraffin separation.
This reduces the energy demand for downstream purification, a major energy
consumer in ethylene plants (IEA, 2024).
d. Deploy Carbon Capture, Utilisation, and Storage (CCUS): Install carbon capture
units on cracker flue gas stacks. Captured CO
2
can be utilised to produce methanol
or stored (WEF, 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 90
Industry Sector Modelling and Results
e. Build capacity for Green Chemistry: Establish industry-academia partnerships to
train the workforce in electrochemistry, hydrogen safety, and circular supply chain
management. Training programs must focus on the operational nuances of e-furnaces
and handling variable quality recycled feedstocks (360iResearch, 2025).
3.2.7 Chlor-Alkali
Projections for Chlor-Alkali Production
The chlor-alkali sector analyses key products including Caustic Soda, Soda Ash, and Liquid
Chlorine. Future demand is projected using a univariate regression model wherein per-capita
demand is determined based on per-capita GDP. Based on this, Caustic Soda production is
projected to increase with a CAGR of 5.3% between 2023-24 and 2049-50 and a CAGR of 3.31%
between 2049-50 and 2069-70, reaching about 14 Mt by 2050 and about 27 Mt by 2070. About
18.8 Mt of liquid chlorine, a co-product of caustic soda, would be produced in 2070. Soda Ash
production is projected to increase with a CAGR of 3.8% between 2023-24 and 2049-50, and
a CAGR of 2.68% between 2049-50 and 2069-70, reaching about 8 Mt by 2050 and about 13
Mt by 2070 (Figure 3.24).
Million Tonnes
Caustic Soda Soda Ash Liquid Chlorine
70
60
50
40
30
20
10
0
2020202520502070
Figure 3.24: Chlor-Alkali products production (million tonnes)
Scenarios
Two scenarios are examined for the Chlor-Alkali sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), with differences explained in the table below: Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 91
Industry Sector Modelling and Results
Table 3.7: Scenario assumptions for chlor-alkali sector
Current Policy ScenarioNet Zero Scenario
Specific Energy
Consumption (SEC)
Average efficiency improves
to reach India’s best available
technology
Caustic Soda: Improves from 15.5
GJ/ton in 2025 to 13.28 GJ/ton
by 2070
Soda ash: Improves from 8.54
GJ/ton in 2025 to 7.61 GJ/ton by
2070
Average efficiency improves to
reach the global best available
technology
Caustic Soda: Improves from 15.5
GJ/ton in 2025 to 11.72 GJ/ton by
2070
Soda ash: Improves from 8.54
GJ/ton in 2025 to 6.86 GJ/ton
by 2070
Fuel MixCaptive/Grid electricity: Share
of captive declines from 80% in
2025 to 60% by 2070.
Further, within captive, from
dominantly fossil in 2025, there
will be a gradual shift towards
non-fossil fuels, whose share
increases to 40% by 2070.
Captive/Grid electricity: Share
of captive declines from 80% in
2025 to 40% by 2070.
Further, the entire captive
power will be a non-fossil-based
electricity system by 2070.
Results
Final Energy Consumption
The final energy consumption for Chlor-Alkali (Caustic Soda+Soda Ash) increases from 2 Mtoe
in 2025 to 11.7 Mtoe in Current Policy Scenario (CPS) and 9.4 Mtoe in Net Zero Scenario (NZS)
by 2070. Figures 3.25 and 3.26 provide the fuel-wise consumption separately for Caustic Soda
and Soda Ash. Electrification while increases from 44% in 2025 to 65% in CPS by 2070, the
role is greater with almost 80% electrification in 2070 in NZS across the Chlor-Alkali Industry.
Biomass Fuel Oil Non-Coking Coal Natural Gas Grid ElectricityCaptive Electricity
Fuel Consumption in Caustic Soda Production
2020202520502070
CPSCPSNZSNZS
Mtoe
10
9
8
7
6
5
4
3
2
1
0
Figure 3.25: Final energy consumption in caustic soda industry (Mtoe) under Current Policy
Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 92
Industry Sector Modelling and Results
Mtoe
Fuel Oil Non-Coking Coal Grid ElectricityCaptive Electricity
Fuel Consumption in Soda Ash Production
3
2.5
2
1.5
1
0.5
0
2020202520502070
CPSCPSNZSNZS
Figure 3.26: Final energy consumption in the soda ash industry (Mtoe) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS)
Emission Intensity:
The emission intensity of caustic soda and soda ash production in India is 2.9 tCO
2
/t and 1.28
tCO
2
/t of production in 2025. Soda ash accounts for 25% of India’s IPPU emissions. Under
the Current Policy Scenario (CPS), emission intensities are expected to drop to 1.18 tCO
2
/t for
caustic soda and 1.05 tCO
2
/t for soda ash in 2070. The chlor-alkali industry would thus remain
a significant source of industrial CO₂ emissions even in 2070 (Figure 3.27).
In the Net Zero Scenario (NZS), emissions intensities in 2070 would be 94% lower for caustic
soda and 74% lower for soda ash as compared to CPS. This would be achieved through rapid
electrification using low-carbon electricity and greater improvement in SEC. The lower reduction
in the case of soda ash is due to a continued rise in process emissions.
Emission Intensity: Caustic Soda
2020 2025 2050 2070
CPSCPSNZSNZS
tCO
2
/t
3.5
3
2.5
2
1.5
1
0.5
0
Emission Intensity: Soda Ash
2020 2025 2050 2070
CPSCPSNZSNZS
tCO
2
/t
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Figure 3.27: Emission intensities for caustic soda (left) and Soda Ash (right) (tCO
2
/t) under
Current Policy Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 93
Industry Sector Modelling and Results
Barriers and Enablers for Chlor-Alkali Sector Energy Transition
Challenges
a. Emissions from coal-based power: Although chlor-alkali production is electrified
(JMK Research & Analytics, 2025), much of this is power sourced from the grid or
coal-based captive sources, leading to significant Scope 2 emissions.
b. High energy costs and price fluctuations: Energy costs make up 60–70% of
production costs, impacting industry competitiveness at the time of electricity price
volatility.
c. Surplus chlorine challenge: Caustic soda production generates excess chlorine, but
low downstream demand and its hazardous nature create storage and utilisation
challenges (Harish, 2024).
d. Underutilised hydrogen by-product: Hydrogen generated as a by-product of brine
electrolysis often goes underutilised or wasted.
e. Brine quality issues: The process requires purified water and high-quality brine; poor
brine quality lowers efficiency and increases energy use, scaling and maintenance
issues.
f. Barriers for smaller manufacturers: Small and medium-sized manufacturers lack the
necessary resources to invest in energy-efficient technologies or renewable power,
slowing overall sector-wide low-carbon transition.
Suggestions
a. Shifting from mercury to advanced cell technology: Shifting to membrane cell
technology has already reduced 25% electricity consumption (Kermeli & Worrell,
2025). Further energy savings are possible with next-generation technologies like
oxygen-depolarised cathodes (ODCs) and bipolar membranes, supported through
R&D partnerships and providing tax benefits to early adopters.
b. Flexible operations with RE: Procuring RE through long-term PPAs, captive solar
or wind projects or the RESCO model can cut emissions and reduce exposure to
power price volatility.
c. Utilising surplus chlorine in downstream industries: Expanding downstream linkages
to utilise surplus chlorine for PVC, solvents, or bleaching agents, leveraging shared
infrastructure with the support of Industry groups such as the Alkali Manufacturers
Association of India (AMAI). Researchers have found that setting up a 150,000 Mt/
year PVC plant could use up to nearly 45% of residual chlorine from chlor-alkali
plants in Bangladesh, and turn the waste problem into a feedstock solution, cutting
storage risks and adding to profits (Roy et al, 2022).
d. Utilising hydrogen for decarbonisation: Generated hydrogen can be used to produce
hydrogen peroxide or as fuel for power generation and fuel cell vehicles (Roy et al.,
2022). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 94
Industry Sector Modelling and Results
3.2.8 Fertiliser
Projections for Fertiliser Production
Fertiliser demand in India is projected using the methodology widely adopted and shared
by the Fertiliser Association of India. The detailed methodology for arriving at projections
for major fertiliser production in India through 2070 is provided in Annexure IV. Fertiliser use
is derived from food grain requirements, which are estimated based on population growth
projections. Based on this actual fertiliser nutrient requirement, demand and supply of major
fertiliser products, namely urea, DAP, and complex fertiliser, have been projected (Figure 3.28).
Million Tonnes
Urea DAP Complex Fertiliser
80
70
60
50
40
30
20
10
0
2020202520502070
Figure 3.28: Major fertiliser products production (million tonnes)
Production of urea, DAP and complex fertilisers during 2023-24 was 31.41 Mt, 4.29 Mt, and 9.54
Mt, respectively. Based on the methodology described in the Annexure and assuming a level of
self-sufficiency, indigenous supply projections of these major fertiliser products are estimated,
as shown in Figure 3.28.
Scenarios
Two scenarios are developed to assess low-carbon transition pathways for the fertiliser sector:
a Current Policy Scenario (CPS), reflecting continuation of existing policies and measured
technology uptake, and a Net Zero Scenario (NZS) aligned with India’s 2070 Net Zero emissions
goal. Both scenarios assume the same growth in fertiliser production but differ fundamentally
in their assumptions of energy efficiency, fuel use and electricity sourcing.
Table 3.8: Scenario assumptions for fertiliser sector
Current Policy ScenarioNet Zero Scenario
Specific Energy
Consumption SEC
Average efficiency improves
to reach India’s best available
technology with 0.4%
improvement per year till 2070
Average efficiency improves to
0.6% every year till it reaches the
CPS, 2070 value and saturates
after this. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 95
Industry Sector Modelling and Results
Current Policy ScenarioNet Zero Scenario
Green HydrogenUptake remains limited until after
2040, when green hydrogen
becomes commercially viable,
and deployment accelerates to
70% by 2070.
Penetration rises to near 90% by
2070 with strong uptake from
2030, enabling near complete
low-carbon transition of ammonia
production.
Electricity Supply Captive generation continues to
provide around 70% of electricity
consumption in 2070 (same as in
2025). However, within captive,
from dominantly fossil in 2025,
there will be a gradual shift
towards non-fossil fuels, whose
share increases to 60% by 2070.
Captive generation continues to
provide around 70% of electricity
consumption in 2070 (same as
in 2025). However, the entire
captive power will be a non-
fossil-based electricity system by
2070.
Results
Energy Demand: The fertiliser sector’s final energy demand will grow substantially with higher
production, but the scenarios diverge in magnitude. Under the Current Policy Scenario (CPS),
total final energy consumption by fertiliser would rise from 19 Mtoe in 2025 to about 25 Mtoe
(treating green hydrogen and captive electricity consumption as part of fuel rather than energy
required to generate them) in 2070 (Figure 3.29). This 1.3 times increase would be driven by
expansion of output, but partially offset by incremental efficiency gains.
Under the Net Zero Scenario (NZS), energy demand in 2070 would be lower due to higher green
hydrogen penetration, which replaces the natural gas required to generate gey hydrogen, reaching
around 23.5 Mtoe in 2070. Simultaneously, the share of grid electricity would increase while
captive electricity generation would shift from coal to renewables, aligning with the Net Zero
trajectory.
Mtoe
Natural Gas Green Hydrogen Grid ElectricityCaptive Electricity
2020 202520502070
CPSCPSNZSNZS
30
25
20
15
10
5
0
Figure 3.29: Final energy consumption of major fertiliser products (Mtoe) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 96
Industry Sector Modelling and Results
Emission Intensity
The production of ammonia, the key feedstock for fertilisers, is highly dependent on fossil
fuels, resulting in significant CO₂ emissions from hydrogen generation and process energy use.
In contrast, urea production uniquely utilises CO
2
as a feedstock, making it a partial CO
2
sink
within the fertiliser value chain. During urea synthesis, CO
2
reacts with ammonia to form urea,
resulting in the utilisation of approximately 0.73 tCO
2
/t urea produced (as considered in this
study). Considering this sink of CO
2
during the urea production process, the average emission
intensity of fertiliser production is estimated at around ~0.56 t CO
2
/t of fertiliser production
(Figure 3.30).
CPSCPSNZSNZS
2050202520202070
Emission Intensity (tCO
2
/tonne)
tCO
2
/tonne
0.8
0.6
0.4
0.2
0
-0.2
-0.4
-0.6
Figure 3.30: Emission intensity of the fertiliser sector (tCO
2
/t)
With energy transition and low-carbon transition measures discussed above, emissions intensity
would decline over time under both scenarios, although the magnitude of reduction would vary
significantly. Under the Current Policy Scenario (CPS), emissions intensity would decrease by
about 32% by 2050, driven by incremental efficiency improvements and a gradual shift towards
green hydrogen and renewable energy. This reduction would deepen substantially to 88% by
2070, reflecting more widespread adoption of low-carbon technologies and cleaner energy
sources.
Under the Net Zero Scenario, grey hydrogen-based ammonia synthesis will be largely replaced
by green hydrogen by 2070. This transition would eliminate most process-related CO₂ emissions
associated with hydrogen generation, fundamentally altering the carbon profile of the fertiliser
sector. Accounting for CO₂ utilised as a feedstock during urea production would mean that the
fertiliser production process could shift to a net sink. With the continued incorporation of CO
2
in
urea synthesis, combined with near-zero-emission hydrogen and cleaner energy inputs, fertiliser
manufacturing could play a carbon-absorbing role within industrial systems, highlighting its
potential contribution to long-term Net Zero pathways. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 97
Industry Sector Modelling and Results
Barriers and Enablers for Fertiliser Sector Energy Transition
Challenges
a. High import dependence of raw materials: India currently imports all of the muriate
of potash (MOP), 90% of phosphate, and 25% of urea demand (Randive et al., 2022)
b. Low efficiency of plants: The average technical efficiency of fertiliser plants stands
at 57%, hinting at a significant scope for improvement (Khan, 2017). Energy intensity
in some fertiliser production plants is very high (12.6-12.7 Gcal/t of urea) compared
with the norm of 5.5 Gcal/Mt of urea (Oak, 2022).
c. Disproportionate nutrient use: Despite the NBS (Nutrient-Based Subsidy) policy,
which aimed to promote more phosphorus and potassium-based fertilisers, the ratio
of Nitrogen:Phosphorus: Potassium (NPK) was 10.9:4.4:1, compared to a consensus
that this ratio should be 4:2:1 (The Fertiliser Association of India, 2024).
d. Low investment in research and development (R&D): R&D spending in the industry
is less than 1% of the total revenue. This hampers innovation and technological
advancement in the industry (Khan, 2017).
e. High production costs: Production costs are 8-17% higher than the conventional
method, depending on the use of urea (Kothadiya et al 2024).
Suggestions
a. Increase energy efficiency of plants: Incentivising retrofitting of older fertiliser plants
to reduce energy intensity to the level of industry best of 5.5 Gcal/t of urea (Oak,
2022), measures include installing Variable Frequency Drives (VFDs) on pumps and
motors, and replacing ageing pumps and compressors. A good example is that
of Iran, where older compressor rotors were replaced with high-solidity diffusers,
boosting efficiency from 67% to 74%. Similarly, the fertiliser plant’s refrigeration
cycle was retrofitted by application of a Pinch heat, reducing shaft work by 15%
(Panjeshahi, 2008).
b. Reduce fertiliser imports: The Indian government has already undertaken many new
initiatives to reduce reliance on fertiliser imports. In 2023, the government classified
potash and potassic minerals like glauconite as critical (PIB, 2023). This move will
bring in private investment through the Mines and Minerals Act. This year, the first
mining block of potash and halite was auctioned in India in Rajasthan. Further
research is ongoing on alternative sources for NPK that are available domestically
and can be utilised (Ministry of Chemicals and Fertilisers, 2022). One of these is
Potash Derived from Molasses (PDM), which is a byproduct of the sugar industry
that has been included in the NBS policy since 2022. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 98
Industry Sector Modelling and Results
3.2.9 Refineries
Demand Projections
In India, petroleum products are primarily used in the transport sector, followed by industry,
cooking (residential and commercial), agriculture, and power. Transport fuels like diesel and
petrol dominate consumption; these two products together account for around 43% of total
petroleum product demand.
The model estimates future refinery capacity demand by aggregating projected requirements
across sectors under different scenarios. These scenarios are shaped by the specific transition
pathways of each sector: shifts to alternative fuels/technologies, efficiency improvements,
material re-cycling and policy-driven low-carbon transition. This results in comprehensive
projections for conservative as well as ambitious energy transition contexts. Refinery capacities
are calculated based on the ratio of crude oil to petroleum products. The total petroleum
demand reaches around 400 Mt in 2050 and 345 Mt in 2070 under Current Policy Scenario
(CPS) and 290 Mt in 2050 and 150 Mt in 2070 under Net Zero Scenario (NZS) (57% lower than
CPS in 2070). Therefore, the crude oil processed will also be lower in NZS as compared to CPS.
Scenario Assumptions
Two scenarios are examined for the Refinery sector: the Current Policy Scenario (CPS) and
the Net Zero Scenario (NZS), with differences explained in the table below:
Table 3.9: Scenario assumptions for refineries sector
Current Policy ScenarioNet Zero Scenario
Green HydrogenMajor driver for Green H
2
with
penetration reaching 70% by
2070.
Major driver for Green H
2
with
penetration reaching 100% by
2070.
Electricity Supply Captive generation continues to
provide around 90% of electricity
consumption in 2070 (same as in
2025).
Further, within captive, from
dominantly fossil in 2025, there
will be gradual shift towards non-
fossil whose share increases to
30% by 2070.
Dependence on captive
generation decreases to 70% of
total electricity consumption in
2070 (Reduced from 90%).
The entire captive power will
be non-fossil-based electricity
system by 2070.
Results:
Total final energy consumption in the refinery sector would increase steadily in the near to
medium term, driven by rising crude throughput and increasing refining depth. Until mid-century,
energy demand would be dominated by natural gas and petroleum products, supplemented
by grid electricity and refinery-derived fuels such as syngas and purge gas. By mid-century,
however, significant uptake of green hydrogen would cause a noticeable reduction in the use of
natural gas as feedstock for grey hydrogen. A greater shift towards grid-based electricity and
progressive low-carbon transition of captive power generation through RE integration would
result in a gradual transformation of the refinery energy mix (Figure 3.31). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 99
Industry Sector Modelling and Results
Final Energy Consumption in Refinery Sector (Mtoe)
45
40
35
30
25
20
15
10
5
0
2020202520502070
CPSNZSCPSNZS
Grid ElectricityGH
2
Natural Gas Petroleum Products Syn Gas/Purge GasCoalRE
Figure 3.31: Final energy consumption in refinery (Mtoe) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Under the Current Policy Scenario (CPS), despite the growing role of green hydrogen by mid-
century, the sector would rely substantially on fossil fuels for thermal energy and captive power.
With the increasing demand for petroleum products (rising by 1.6 times in 2050 from 2025
value), total final energy consumption would rise from around 30.5 Mtoe in 2025 to approximately
39 Mtoe by 2050. Beyond 2050, energy demand would decrease slightly (due to a decrease
in petroleum product demand from end-use sectors) to about 34 Mtoe by 2070. It should be
noted that energy demand estimates do not include the renewable electricity required for green
hydrogen production, which lies outside the refinery’s final energy consumption boundary.
In contrast, under the Net Zero Scenario (NZS), the impact of significant mid-century green
hydrogen deployment would be more pronounced and be complemented by bigger structural
changes. Total final energy consumption would decline substantially by 2070, driven by: (i)
reduced crude oil demand as petroleum product use, particularly in the energy sectors, falls
under the Net Zero pathway, and (ii) a decisive shift in the energy mix towards electricity
and green hydrogen, with a corresponding reduction in natural gas and petroleum products.
Refinery fuel gas and syngas consumption would also decline as grey hydrogen production is
phased out. Total final energy consumption under NZS at 23 Mtoe in 2070, would be 32% lower
than that under the Current Policy Scenario (CPS).
Overall, the projection underscores that while refinery energy demand would rise under the
CPS, a Net Zero pathway supported by a significant reduction in petroleum product demand
and higher green hydrogen penetration would align the sector with long-term low-carbon
transition objectives due to moderation in energy demand and a fundamental shift in the fuel
mix away from fossil fuels. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 100
Industry Sector Modelling and Results
Emissions
In the refinery sector, nearly one-third of total emissions are generated by process-related
sources, primarily due to the use of grey hydrogen and fossil fuel combustion in catalytic
cracking units. The remaining emissions are largely attributable to fossil-fuel-based thermal
energy and captive electricity generation, which together account for the bulk of energy-related
emissions. The resulting emission intensity of the sector in 2025 is estimated at around 0.28
tCO₂ per tonne of crude oil processed (Figure 3.32).
0.300
0.250
0.200
0.150
0.100
0.050
0.000
CPSCPS NZSNZS
2070205020252020
Figure 3.32: Emission intensity of refinery sector (tCO
2
/t) under Current Policy Scenario
(CPS) and Net Zero Scenario (NZS)
Despite the implementation of low-carbon transition measures such as energy-efficiency
improvements, fuel-switching and green hydrogen penetration defined under the Current
Policy Scenario (CPS) trajectory, the refinery sector continues to retain a significant emissions
footprint. Under the CPS, emission intensity would decline modestly by about 26%, reaching
approximately 0.20 tCO₂ per tonne, reflecting the limited abatement potential for process
emissions and the continued reliance on fossil fuels. In contrast, deeper low-carbon transition
measures deployed under the Net Zero Scenario (NZS), including use of renewable energy,
cleaner fuels, and large-scale penetration of green hydrogen, would reduce emission intensity
to around 0.145 tCO₂ per tonne of crude oil processed in 2070, corresponding to an overall
reduction of approximately 47% relative to 2025 levels. For unabated emissions, adoption of
carbon capture, utilisation, and storage (CCUS) would be crucial. CCUS will play a critical role
with captured CO₂ assumed to be partially utilised in enhanced oil recovery (EOR). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 101
Industry Sector Modelling and Results
Barriers and Enablers for Refinery Sector Energy Transition
Challenges
a. High CO₂ from Steam Methane Reforming (SMR) process: Hydrogen utilised for
hydrocracking and desulfurisation generates a significant amount of emissions (9
kgCO₂/kg H
2
), if produced using the Steam Methane Reforming (SMR) process (Sun
& Elgowainy, 2019).
b. Barriers to CCUS and renewable integration: Retrofitting refineries to incorporate
CCUS or RE is expensive and involves large investments. In addition, a lot of Indian
refineries operate on old infrastructure that is not suitable for CCS or RE integration.
c. Ageing equipment and limited digital controls: This results in energy intensity
above world best practices and limits the scope for optimisation in older plants.
Further, lack of predictive maintenance and advanced analytics leads to unplanned
outages, flaring and inefficiencies, thereby increasing carbon intensity.
Suggestions
a. Improving energy efficiency: Installing heat recovery systems, upgrading reactor
internals, shifting from steam to electric drivers and using advanced process controls
would help lower energy use and improve reliability.
b. Invest in modular CCUS: Modular CCUS units allow phased installation, reducing
upfront risk, shutdowns, and retrofit challenges. IOCL’s Koyali refinery reports
capture costs of USD 55–60/tCO
2
, with potential applications in oil fields, chemical
production, or carbon credits to offset investment (Sharma et al., 2025). The REALISE
CCUS programme in the EU, China, and South Korea aims to double capture rates,
cut costs by nearly a third, and lower emissions by 10 Mt a year by 2030.
c. Adopting advanced catalysts: new generations of catalysts, operating at lower
pressures and temperatures, reduce hydrogen requirement for desulfurisation,
resulting in lower energy consumption.
d. Invest in heat recovery and residual heat use: Refineries can capture and reuse waste
heat from flue gases, reducing both cost and emissions (e.g., Reliance’s Jamnagar
refinery in India). Shell’s Pernis refinery in Rotterdam began supplying residual heat
to a local network in 2018, providing heating for over 16,000 homes and reducing
CO₂ emissions by 35,000 tonnes annually (Shell 2019).
e. Diversification into low-carbon products: Refineries can co-process renewable
feedstocks in existing hydrotreaters to produce renewable diesel or sustainable
aviation fuel (SAF). In many cases, with adequate hydrogen supply, only a catalyst
change is needed in kerosene hydrotreaters, allowing up to 5% renewable blending
at relatively low cost (Chopra 2024). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 102
Industry Sector Modelling and Results
3.3 OVERALL INDUSTRY RESULTS AND SUMMARY
India’s industry sector consumed about 302 Mtoe of energy in 2020 and 369 Mtoe in 2025
10
,
with the mix dominated by fossil fuels. In the fuel mix for 2020, coal supplied roughly 34%
of energy demand, followed by petroleum products (37%), natural gas (12%), electricity (15%),
and 1% biomass. Within this, a sizeable fraction of fuels is used as feedstock rather than for
combustion, e.g. naphtha/natural gas in chemicals and petrochemicals and natural gas in
ammonia/urea, creating process-related emission profiles distinct from those of fuel use.
Captive power contributes about 41% of total industrial electricity consumption, which is
generated predominantly from coal (around 86% of captive output). Gas and diesel constitute
about 11%, and hydro, solar and wind together account for just over 3% of captive electricity.
Overall Industry Energy Mix
2020
2020
BiomassNatural GasCoal
Petroleum ProductCaptive ElectricityGrid ElectricityRECoal Gas & Diesel
1%
34%
12%
37%
10%
6%
85%
12%
3%
Figure 3.33: Overall industrial energy supply mix and fuel type for captive electricity, 2020
Energy Demand Projections
Final energy demand. In Current Policy Scenario (CPS), final energy demand increases from
370 Mtoe in 2025 to 980 Mtoe in 2050 and 1150 Mtoe by 2070. Fossil share of final energy
moderately declines from 83% in 2025 to 72% by 2050 and 61% by 2070, with corresponding
increase shifting towards electricity whose share rises from 16% in 2025 to 24% by 2050 and
29% by 2070. Coal continues to play a dominant role till 2050, whose share in final energy
increases from 39% in 2025 to 45% by 2050 before declining to 35% by 2070. Biomass plays
a limited role in CPS, with a modest increase from 1% in 2025 to 5% by 2070 in final energy.
In Net Zero Scenario (NZS), on the other hand, final energy increases to 890 Mtoe by 2050
(~10% lower compared to CPS) and 980 Mtoe by 2070 (15% lower compared to CPS). The share
of fossil declines 52% by 2050 and 26% by 2070 from a predominantly fossil system in 2070.
Coal share drops to 7% by 2070, with majority of coal-use operating with Carbon Capture in
NZS. Electrification continues to play a major role, with share increasing to 37% by 2050 and
10 This includes fuels for non-energy uses, as well as consumption categorised under the “non-specified” category and
statistical differences in the MoSPI energy balance, which are assumed to be captured within the “Other Industries”
category, after accounting for transport sector allocations. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 103
Industry Sector Modelling and Results
55% by 2070. In practice, this entails deep electrification of low and medium temperature heat,
a switch to H₂-based routes for very high temperature and process needs (for example DRI-EAF
steel, green ammonia and methanol), and a transition of captive power from fossil units to grid
and captive renewable supply. Also, in comparison to Current Policy Scenario (CPS), biomass
share also increases to 9% by 2070. Green hydrogen scales from zero today to 50 Mtoe (about
6% of industrial energy) by 2050 and 100 Mtoe (around 10%) by 2070 (See Figure 3.34 and
Table 3.10).
Biomass Coal Natural Gas Petroleum Product Electricity Green Hydrogen
Final Energy Consumption
1400
1200
1000
800
600
400
200
0
CPSCPS
20502020 20252070
NZSNZS
Mtoe
Figure 3.34: Projections of demand (Mtoe) under Current Policy Scenario (CPS) and Net
Zero Scenario (NZS)
Table 3.10: Projections of demand breakup under Current Policy Scenario (CPS)
and Net Zero Scenario (NZS)
2020 2025
20502070
Current
Policy
Scenario
Net Zero
Scenario
Current
Policy
Scenario
Net Zero
Scenario
Biomass1% 1% 3% 5% 5% 9%
Coal 34% 39% 45% 26% 35% 7%
Natural Gas 12% 12% 8% 10% 8% 8%
Petroleum
Product
37% 32% 18% 17% 17% 11%
Electricity 15% 16% 24% 37% 29% 55%
GH
2
0% 0% 2% 6% 5% 10%
Total Energy
Demand (Mtoe)
302 370 980 890 1150 980
Fuel for Captive
Electricity
34% Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 104
Industry Sector Modelling and Results
Pillars of Net Zero Transition
India’s industrial pathways to Net Zero rests on a portfolio of measures. This section discusses
key levers critical for hard-to-abate sectors, including green hydrogen, circular economy, and
carbon capture technologies. Sector-specific interventions and potential levers are discussed in
detail within each respective sub-sectors.
Green Hydrogen
Hydrogen is the critical decarbonisation vector for hard-to-electrify industrial processes
providing a clean reducing agent for ironmaking and a zero-carbon feedstock for ammonia,
and refinery uses. From a near-zero green baseline in 2025 (hydrogen use is predominantly
grey, concentrated in refineries and fertilisers), the two scenarios project sharply divergent
trajectories.
45
40
35
30
25
20
15
10
5
0
CPSCPSCPSNZS
203020502070
NZSNZS
Steel Refinery Fertiliser Export
Million Tonnes
Figure 3.35: Green hydrogen projection in CPS and NZS (million tonnes) under Current
Policy Scenario (CPS) and Net Zero Scenario (NZS)
Under the Current Policy Scenario (CPS), green hydrogen would grow mainly as an adjunct
to fossil routes: demand reaches 8.4 Mt in 2050, and 24 Mt in 2070. The sectoral pattern
shifts gradually toward steel, about 2.0 Mt in 2050 and 13.3 Mt in 2070, with the remainder
of 2070 splitting between exports (5 Mt), fertilisers (3.5 Mt), and refineries (2 Mt). In Net
Zero Scenario (NZS), green hydrogen becomes a pillar of industry. Demand rises to 22 Mt
in 2050, and 42 Mt in 2070, almost double that under CPS. Steel would be the anchor load
(13.0 Mt in 2050 and 28.2 Mt in 2070) as hydrogen-DRI/EAF replaces coking-coal routes,
fertilisers shift decisively to green hydrogen as feedstock (4.5 Mt), refineries green their
process hydrogen even as crude throughput moderates (2.3 Mt), and an export platform in
ammonia/synthetic fuels underpins scale (7 Mt) (Figure 3.35).
This has material consequences on power. At around 55 MWh of electricity required per tonne
of hydrogen, CPS requires about 470 TWh (2050) and 1330 TWh (2070) for electrolysis, while Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 105
Industry Sector Modelling and Results
Net Zero Scenario (NZS) requires 1,210 TWh (2050) and 2,310 TWh (2070). Green hydrogen
thus ties the industrial transition directly to clean-power expansion and long-term power-market
reforms (open access, long-tenor PPAs, balancing and storage).
Circular Economy
India starts from a base that is dominated by primary materials— for example, cement remains
clinker-intensive, and steel relies heavily on ores and fulfils scrap supply shortfalls through
imports (India was the world’s second largest ferrous-scrap importer in 2023, bringing in 11.76
Mt, up 40% year on year (S&P Global, 2024).
Circular economy strategies decouple growth from raw-material use by maximising reuse,
recycling, and material recovery. Under the Current Policy Scenario (CPS), measures like
extended producer responsibility (EPR), end-of-life vehicle (ELV) rules, and improved recycling
deliver notable gains. The Net Zero Scenario (NZS) delivers deeper interventions across key
sectors. In steel, scrap utilisation is estimated to rise from 22% at present to 30% by 2050
and 40% by 2070, reducing reliance on energy-intensive ore-based smelting. Recycling would
become a prominent source of aluminium and use just 5% of the energy required for primary
production. In cement, lower clinker ratios (0.6 (CPS) and 0.55 (NZS)) and the adoption of
blended cements with recycled aggregates. At an output of 1,958 Mt in 2070, nearly 100 Mt of
clinker would be avoided annually through higher use of SCM (slag, calcined clay, pozzolans,
limestone). (Figure 3.36)Share of Scrap- Steel Share of Scrap- Aluminium Clinker to Cement Ratio
50%
40%
30%
20%
10%
0%
50%
40%
30%
20%
10%
0%
0.8
0.6
0.4
0.2
0
2020
22%
2020
27%
2020
0.67
2050
30%
2050
36%
2050
0.62
2070
40%
2070
40%
2070
0.55
Figure 3.36: Net Zero Scenario - share of scrap in steel and aluminium, and clinker to
cement ratio in cement production projections
Carbon Capture
Even after efficiency improvement, electrification, circularity, and green hydrogen, India’s
industry retains a large “hard” core of process CO₂ (This is from cement calcination, steel off-
gases, aluminium anode) and residual fuel/feedstock emissions (Figure 3.37). Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 106
Industry Sector Modelling and Results
1400
1200
1000
800
600
400
200
0
Aluminium
93
317 09
42
56
745
104 1365
Other
Industries
Chlor-alkaliRefinery Ethylene Cement Steel Residual
Emissions
GHH Emissions (Million Tonnes)
Figure 3.37: Break-up of residual emissions (MtCO
2
)
Under the Current Policy Scenario (CPS), no CCUS is installed, so these emissions remain
unabated. In the NZS, capture scales as the last-mile lever: rising from pilot volumes in the
2030s to around 100 MtCO₂/yr in 2050, then expanding with CO₂ hubs, pipelines, and saline
storage to roughly 1,000 MtCO₂/yr in 2070, covering essentially all point-source-amenable
residuals.
Investment Requirement
India’s industrial low-carbon transition will demand huge capital to finance the shift from
conventional fossil assets to large-scale deployment of electrification, hydrogen, and carbon
capture systems, which are capital-intensive. Financing clearly needs to prioritise efforts towards
electrification, efficiency and first-of-a-kind hydrogen projects till 2060, while the post-2050
period is dominated by carbon capture and the build-out of hydrogen and CO₂ networks. By
2070, under the Net Zero Scenario, the industry sector alone will require cumulative investments
of around USD 6.1 trillion, of which roughly USD 2.2 trillion is needed before 2050 and another
USD 3.9 trillion after 2050 (Figure 3.38). The investment profile is back-loaded, with nearly
two-thirds occurring after mid-century as carbon capture and hydrogen infrastructure expand.
Investment Requirement- USD Trillion
2025-2050
2050-2070
0 0.51.53412.523.54.5 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 107
Industry Sector Modelling and Results
Figure 3.38: Total investment requirement (USD Trillion)
Investment Requirement in NZS
USD Trillion
0.002.005.001.004.003.006.00 7.00
Industry CAPEX
Captive- Non-Fossil
Captive- Thermal
Carbon Capture
Green Hydrogen- Electrolyser
RE for GreenH
2
Figure 3.39: Technology-wise Investment requirement in NZS (USD Trillion)
Green Hydrogen and its Renewable Backbone (36%): About USD 1.2 trillion in
electrolysers and USD 1.1 trillion in dedicated renewables, front-loaded through the
2030s–40s and then accelerating post-2050 as hydrogen becomes a mainstream
fuel and feedstock.
Captive Electricity (13%): investments would be made mainly before 2050 as firms
hedge reliability and cost while moving off captive coal and gas (captive investments
in thermal USD 0.04 trillion and nuclear USD 0.02 trillion would remain marginal).
Carbon Capture Technologies (21%): Minimal before 2050 but surging thereafter to
abate residual process CO₂ in cement, steel, and chemicals.
CAPEX for Industry Expansion (30%): The remainder investments would finance
core plant transformation: steel (12%) from BF-BOF toward H₂-DRI/EAF supported
by scrap-EAF, cement (5%) for kiln efficiency, waste-heat recovery, and lower-
clinker routes, with capture equipment counted under CCUS, chemicals (7%) toward
gas- and then hydrogen-integrated feedstocks with CCUS on residual fossil routes.
Another USD 0.30 trillion is distributed across aluminium, paper, textiles, fertilisers,
chlor-alkali, and refining for capacity expansion (Figure 3.39).
In comparison, Current Policy Scenario (CPS) finance requirements are nearly half those under Net
Zero Scenario (NZS), at USD 3.4 trillion by 2070. Under CPS, investment primarily meets incremental
demand growth, with around 55% of total finance going to CAPEX by 2070, compared to about
30% under NZS. NZS, by contrast, will require a more ambitious investment strategy focused on a
complete transformation of the industry sector through accelerated deployment of GH
2
, RE RTC,
advanced captive nuclear, and CCS.
Limitations and Future Scope
Sectoral Coverage: The current framework disaggregates industries into nine PAT (Perform,
Achieve, and Trade) sectors and a residual “Other Industries” sub-sector. While the nine PAT
industries are modelled in detail, covering specific technologies, their specific energy consumption
(SEC), fuel mixes, and investments, the “Other Industries” category lacks technology-specific Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 108
Industry Sector Modelling and Results
data. For the estimated energy consumption in the other industries category crude methodology
is adopted. For the base year, the fuel mix in “Other Industries” is estimated based on residual fuel
allocated after accounting for other sectors, from which energy consumption per unit of Other
Industries Gross Value Added (GVA) is derived. For future projections, total fuel consumption
for this sub-sector is estimated using projected GVA, while accounting for energy efficiency
improvements and fuel switching toward cleaner fuels and electricity.
Technology Cost Trends: Cost trends for emerging technologies such as green hydrogen
electrolysers, CCUS (Carbon Capture, Utilisation, and Storage), and LC3 cement are derived
based on current best knowledge and stakeholder consultations. However, these estimates may
vary significantly in the future as markets evolve and economies shift due to factors like scale-
up effects, policy incentives, and supply chain maturation. Industry sector modelling thus faces
limitations in projecting long-term investment needs accurately.
Investment Required for Energy Efficiency Measures: In this study, detailed energy efficiency
improvements in a specific sector, identified via industry stakeholder consultations, are
accounted for to estimate future Specific Energy Consumption (SEC). However, the related
capital investments required for these measures are not explicitly modelled.
Stranded Assets Non-Accountability: With the transition in industry sectors, particularly under
Net Zero scenarios, certain assets may become stranded, including their capacity and associated
costs. This study does not account for such stranded assets or their economic implications.
Exclusion of Non-Fuel Raw Materials: This analysis accounts exclusively for fuel inputs in
terms of energy consumption and non-energy applications in different industries. Non-fuel raw
materials, such as iron ore for steel production, bauxite/alumina for aluminium smelting, and
limestone for cement clinker, are excluded from the modelling framework. Consequently, their
supply chain constraints, resource availability, procurement costs, and price volatility are not
incorporated into capacity expansion, cost projections, or scenario pathways.
Aggregation of Sunrise Industries in Other Industries Category: Sunrise industries, such as solar
cell manufacturing, wind turbine production, and electrolyser fabrication, will exhibit significant
energy consumption as domestic manufacturing scales up in India. These sectors are captured
within the aggregate “Other Industries” category, with demand projections derived from GVA
growth excluding PAT sectors. However, their distinct technology profiles, rapid capacity
expansions, and specialised energy intensity characteristics are not explicitly disaggregated or
modelled separately from the broader category.
Uniform Capacity Utilisation Assumptions: This study assumes a constant 80% Plant Load
Factor (PLF) across all industrial capacities to estimate investment requirements. In reality,
PLF varies significantly across industry categories, technologies, and historical periods due to
demand fluctuations, policy interventions, and operational efficiencies. This uniform assumption
introduces uncertainty in capacity expansion projections and associated capital expenditure
estimates.
Scrap Availability and Supply Constraints: For scrap utilisation scenarios, this analysis assumes
full availability of required scrap inputs without supply-side constraints. Detailed modelling of
scrap generation, collection logistics, quality specifications, import dependencies, or domestic Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 109
Industry Sector Modelling and Results
recycling capacity expansions has not been conducted.
Exclusion of Non-CO
2
and PFC Gas Abatement: This analysis does not model abatement
measures for non-CO
2
greenhouse gases or perfluorocarbons (PFCs) emitted by industrial
processes. Consequently, their mitigation potentials, technology costs, and emission reduction
contributions are excluded from Net Zero scenario projections.
Future Model Improvements
Future iterations of the industry sector modelling framework will address these limitations
through enhanced data granularity and dynamic methodologies. Key enhancements include
disaggregating “Other Industries” into technology-specific sub-sectors (including sunrise
industries), incorporating non-fuel raw material supply chains and scrap recycling dynamics,
explicitly modelling energy efficiency capital requirements alongside abatement costs for
non-CO
2
/PFC gases, and integrating stranded asset risk assessments under varying Net Zero
transition pathways. These improvements would enable more robust investment projections,
reduce uncertainty in cost trajectories for emerging technologies, and better align with India’s
comprehensive energy transition and Viksit Bharat objectives.
. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 110
Industry Sector Modelling and Results Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 111
Industry Sector Modelling and Results
4
CHALLENGES AND
SUGGESTIONS Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 112
4
Challenges and
Suggestions
India stands at a defining moment where it aspires to become a developed economy while also
ensuring that the transition to developed status is through sustainable means. As the engine
of the ‘Viksit Bharat 2047’ vision, the industrial sector drives economic resilience, infrastructure
growth, and employment and yet, it remains the hard-to-abate component of the Net Zero
journey, accounting for ~24% of national emissions in 2020 (MoEFCC, 2024). Decoupling
industrial growth from carbon intensity is no longer a choice but a competitive necessity.
This transition rests on four structural pillars: Energy Efficiency, Circularity, Electrification, and
Clean Fuels & Technologies, supported by an enabling ecosystem of finance and skilled labour.
The following chapter discusses key challenges within these pillars and outlines measures for
enabling low-carbon transition in industrial sectors.
4.1 IMPROVING ENERGY EFFICIENCY
Around two-thirds of global energy is wasted (World Bank 2025). Therefore, energy efficiency is
fundamental to low-carbon transition and the IEA labels it the “first fuel” (IEA, 2024). However,
global energy efficiency improved by just 1% in 2024 (Guy et al. 2025). India has 5.93 crore
registered MSMEs, while they contribute substantially to value addition and employment, many
use outdated, inefficient technologies and processes (PIB 2025). Even a modest 1.3% annual
improvement could avoid nearly 4,606 million tonnes of CO₂e emissions between 2020 and
2050 (Dayal et al. 2025). Recognising the benefits of energy efficiency, India launched its
Perform, Achieve and Trade (PAT) scheme in 2012. Its market-based energy efficiency approach,
covering 1,333 designated entities across 13 energy-intensive sectors, has enabled savings of
nearly 8% in the annual energy use of these sectors (Ministry of Power 2024). Yet, Indian
industries today face multiple challenges in improving energy efficiency. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 113
Challenges and Suggestions
Table 4.1: Challenges and suggestions for improving energy efficiency
Key Barriers Intervention/ Suggestion
Energy
Performance
Monitoring
Weak performance monitoring
Lack of real-time monitoring leads
to reactive maintenance (Bansal &
Tilottma, 2024). The 3-year audit
cycle under PAT (BEE 2014) is too
infrequent to optimise performance.
Lack of Benchmarks:
Absence of uniform benchmarks for
complex thermal processes across
diverse sectors.
Facilitate continuous performance
monitoring.
Shift from infrequent audits to continuous
digital verification, leveraging IoT and AI
tools and standardising the monitoring by
adopting ISO 50001 standards.
Strengthen the Indian energy efficiency
portal of BEE to include global and India
benchmarking data sector-wise.
Financing and
Technology
Modernisation
Limited access to affordable
finance
MSMEs (e.g., textile, foundry
clusters) operate on thin margins
and lack capital for upgrades
despite 1–5-year payback on many
of these technologies.
Lending costs are also high for
MSMEs due to weak balance sheets
and reliance on informal credit.
Prevalence of outdated
technologies
Prevalence of obsolete technologies
like inefficient motors and small
coal-fired boilers due to limited
access to finance and a lack of
awareness
Significantly high-grade heat
(Steel/Cement) and low-grade
heat (Textile/Paper) are vented
out instead of being recovered or
reused. Process heating <150°C
relies heavily on fossil fuels.
Effective implementation and scaling
of the newly launched ADEETIE
scheme (Assistance in Deploying Energy
Efficient Technologies in Industries &
Establishments) through interest subvention
and end-to-end project management
support, addressing financial and awareness
bottlenecks
Reducing the burden on MSME balance
sheets through ESCO models roll-out
Scale the ESCO model where it invests in
the upgrade (e.g., swapping old motors
for IE3/IE4 standard motors) and recovers
costs from shared energy savings.
Considering Waste Heat Recovery as RE
for the purpose of Renewable Consumption
Obligations (RCOs)
Promote adoption of Heat Pumps for
catering to low-heat applications through
VGF mechanisms till the Total Cost of
Ownership viability is achieved.
4.2 BUILDING CIRCULARITY IN MANUFACTURING
The strong reliance on virgin materials is one of the key challenges of industrial decarbonisation
in India, leading to high resource depletion, carbon emissions, and significant waste generation.
For instance, in textiles, only 34% of waste is reused, and 25% is recycled into yarn, resulting
in high dependency on virgin fibres, driving emissions and resource stress (CSTEP and GIZ
2025). In the pulp and paper sector, large mills generate 168–282 m³ of wastewater per tonne
of paper, while smaller mills discharge even more at 187–338 m³ per tonne, mainly due to a
lack of efficient chemical recovery systems, which otherwise could be internally recirculated
and reused (Pathe and Nandy 2021). Similarly, each tonne of scrap in the steel industry saves
1.1 tonnes of iron ore, 630 kg of coking coal, and 55 kg of limestone (Ministry of Steel, 2024).
A circular economy is key for low-carbon transition, as closing material loops can deliver both
economic and environmental benefits, making industries competitive and more resilient in the Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 114
Challenges and Suggestions
long run. For example, in the steel sector, every tonne of scrap used reduces emissions by 58%,
cuts water consumption by 40% and generates 97% less mining waste in comparison to primary
steelmaking (G20 Secretariat India, CEEW, RMI, and WRI India 2023). With India’s growing
demand for infrastructure and real estate, increasing the share of scrap in production can ease
pressure on natural resources while reducing the carbon footprint. The economic opportunity
from circularity is equally significant. India’s circular economy is expected to be worth nearly
USD 2 trillion and create close to 10 million jobs by 2050, creating new channels for innovation,
startups, and recycled product developers (MoEFCC 2025).
Table 4.2: Challenges and suggestions for building circularity in manufacturing
Key Barriers Suggestion & Intervention
Creating
Demand for
Circularity
Low quality of recycled materials
Recycling and resource recovery
(metal scrap, wastepaper, textiles,
plastics) are largely handled
by informal actors, resulting in
variable quality, weak traceability,
and often leading to downcycling.
Informal sector bypasses safety
and other standards, making
formal recycling less competitive.
Lack of standardised grading
and certification for secondary
materials creates low market
confidence. Buyers are hesitant to
pay premiums for “eco-labelled” or
recycled-content products due to
quality risks.
Feedstock Inconsistency:
Industrial users require uniform
quality feedstock. However, mixed
waste streams and a lack of pre-
processing infrastructure lead to
inconsistent moisture and calorific
values, causing process instability.
BIS to introduce rigorous grading and quality
standards for secondary materials to create
assured demand
Notify Green Public Procurement (GPP)
norms, which will incentivise use of BIS-
labelled recycled material.
Provide additional incentives under PLI like
scheme coverage for utilizing domestically
recycled materials.
Provide one-time waiver of outstanding
liability and registration fees to informal
operators, enabling them to overcome initial
compliance barrier for integration into formal
sector.
Introduction of minimum recycled content
guidelines for key sectors
Enable traceability by promoting Digital
Product Passports, which will contain recycled
information to nudge consumer behaviour
Expand EPR to include additional high-
impact and currently under-regulated product
streams such as textiles, footwear, batteries,
etc., and strengthen monitoring for effective
implementation of EPR.
Import
Dependency
on Scrap
Limited domestic scrap
Domestic recovery remains
inadequate, forcing heavy
reliance on imported scrap (Steel,
Aluminium, Paper)
17
, exposing
industry to global price volatility
and supply shocks.
Promote domestic recycling industry through
strong demand signals and assured offtake.
Rationalise GST and import duties to favour
scrap recycling. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 115
Challenges and Suggestions
Key Barriers Suggestion & Intervention
Import
Dependency
on Scrap
Many developed countries are
restricting scrap exports for
promoting domestic low-carbon
transition e.g. EU proposed a scrap
ban on plastic and non-hazardous
waste (like metals, paper) to non-
OECD nations, starting from 2026
and 2027, respectively. Similarly,
China and Russia have imposed
export restrictions, tightening
global scrap availability.
Fiscal policy distortions
Inverted duty structures (e.g.,
higher duties on scrap imports
than finished products in some
segments) discourage domestic
recycling value addition.
Launch organised scrap auctions and index-
linked pricing to reduce volatility.
Strengthen adoption of waste pre-treatment,
and advanced sorting (shredders, zorba,
optical sorters) technologies.
Waste
Management
Logistical Fragmentation:
Supply chains for waste-to-
resource streams (biomass,
MSW, industrial by-products) are
fragmented and expensive.
Moving waste from generation
points (cities/farms) to utilisation
points (industrial hubs) often
incurs high transport costs that
outweigh the material value. This
often also results in weak industrial
symbiosis.
Multiple layers of approval
India’s current waste regulatory
framework requires multiple layers
of authorisations and approvals,
including environmental consents,
hazardous waste permits, and EPR
registrations.
Import reliance on waste
processing equipment
Huge import dependency in
manufacturing of waste processing
equipment, with limited domestic
contribution
Assure offtake through setting up of
aggregation platforms which can be private-
led, or public-private partnerships.
Provide details of collection sectors and
consumer-facing platforms on central and state
government websites, targeted advertisements
in newspapers and digital media.
Promote “waste exchange” clusters, whereby
by-products of one industry (e.g., slag, sludge,
heat) become inputs for another.
Establish decentralised pre-processing centres
(drying/shredding/baling) near waste sources
to densify materials, reduce transport costs, and
ensure consistent quality for industrial users.
Promote common sorting and pre-processing
infrastructure in MSME clusters through PPP
model.
Unified waste management license enabled
through a digital single-window system with
time-bound approvals.
National Manufacturing Mission may include
domestic manufacturing of waste processing
equipment as a priority sector.
Integrate informal workers into EPR chains via
verified IDs, training and PPE.
Develop awareness and capacity-building
programs to enable waste processing and
recycling companies to participate effectively
in voluntary carbon markets.
17 India imported nearly 11.7 million tonnes of ferrous scrap in 2023 to meet its manufacturing requirements, 40% higher
than the quantity imported in 2022 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 116
Challenges and Suggestions
4.3 ELECTRIFICATION OF INDUSTRIAL ENERGY DEMAND
Industrial electrification is emerging globally as a key lever for decarbonising manufacturing by
replacing fossil-fuel based heat and processes with electric alternatives like heat pumps, boilers,
and furnaces. In India, advancing this transition would not only cut emissions but also strengthen
global competitiveness as supply chains and markets shift toward low-carbon production. As of
2022, electrification of the industrial sector in India stood at only 16% (NITI Aayog) and needs
to rise as the economy transitions to low-carbon alternatives.
Table 4.3: Challenges and suggestions for electrification of industrial energy demand
Key Barriers Suggestion & Intervention
Ensuring
Affordable
and Reliable
Electricity
High cost of electricity
India’s power sector is highly
regulated, and unlike many
countries, India’s domestic and
agricultural electricity tariffs are
more subsidised than industrial
and commercial tariffs. This price
distortion led to low electrification
rates (currently ~16%) in Indian
industries. High demand charges
and banking limits also make
electrification challenging.
Rationalisation of power tariffs in the long-
term to reflect the true cost of electricity
and effective enforcement of Time-of-Day
tariffs.
Facilitating timely approvals for industry
seeking Green Energy Open access
Promote and scale Renewable Energy
Service Company (RESCO) models that
aggregate demand, achieve economies
of scale, and offer professional energy
management services, reducing the
operational burden on individual industries.
PM Surya Ghar-like initaitive for MSMEs:
Introduce targeted rooftop solar scheme for
MSMEs providing direct capital subsidies.
The cost of steam generated using
electricity is often higher than that
generated using coal or gas, making
electric heating uncompetitive
without policy support.
Reliability of electricity
Frequent power outages and
voltage drops make it difficult
for industries to rely solely on
grid electricity. Industries need
round-the-clock power; even short
disruptions cause high production
losses, forcing them to rely on
captive coal power plants.
While solar/wind costs have fallen,
industries cannot rely solely on
them due to intermittency and a
lack of cost-competitive storage
options. Open-access approvals
face regulatory friction, and grid
congestion constrains the reliability
of power supply in terms of on-
schedule supply certainty and cost
predictability.
Scale implementation of Firm Dispatchable
Renewable Energy (FDRE) contracts
through deployment of Hybrid plants
matching industrial load profiles.
Develop dedicated power feeders for
industrial zones which can provide assured
24×7 grid power, reducing dependence on
self-generation and encouraging industries
to shift to cleaner electricity sources. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 117
Challenges and Suggestions
Key Barriers Suggestion & Intervention
Technology
Readiness &
Financing
High upfront cost and commercially
unviable electrification technologies
While electrification is mature for
low-temperature heat (<150°C),
technologies for high-temperature
process heat (e.g., cement kilns,
ethylene crackers) are either nascent
or commercially expensive.
Transitioning from fossil-fuel boilers
to efficient electric alternatives like
Industrial Heat Pumps or Electric
Boilers requires significant capital
investment. MSMEs (e.g., in Textile
clusters) lack the financial depth to
fund this asset replacement despite
the efficiency gains.
Skill shortages
There are limited process design
standards for electric heat. Moreover,
there is a shortage of skilled
Engineering, Procurement, and
Construction (EPC) contractors and
O&M providers for electrified heat
systems (e.g., heat pumps). Factory
users perceive risks in adopting
these new technologies.
Develop sector-wide electrification
roadmap linking temperature ranges,
processes, and available electrification
technologies to guide industries in
sequencing their transition (e.g., prioritising
low-grade heat <150°C first).
Promote blended finance instruments
with assured green premiums for mature
electric technologies such as electric
boilers, where high operating costs limit
adoption despite technical and cost
competitiveness.
The National Manufacturing Mission may
include domestic manufacturing of heat
pumps and electricity boilers as a priority
sector.
4.4 DEPLOYMENT OF NEW TECHNOLOGIES AND FUELS
Globally, industrial decarbonisation is being driven by a mix of newer innovative technologies,
sustainable fuels, and materials. While green hydrogen is being explored for steel, refineries and
fertiliser industries, CCUS is emerging as a new technology to capture CO
2
from point sources
such as cement factories. Similarly, sustainable materials such as inert anode technology are
being developed to replace their conventional counterparts and reduce aluminium industry
emissions. The initial transition stages are more focused towards blending fuels, for instance,
hydrogen blending in BF-BOF steel plants to produce low-carbon steel, while the medium to
long-term looks at complete replacement of coal/gas in H
2
-DRI-EAF setups. Countries globally
are planning their long-term pathways by adopting newer technologies, fuels and materials in
the pathways, although most of them are still at a very nascent stage.
Deploying newer sustainable technologies, cleaner fuels, and materials can be challenging.
High upfront costs and green premiums reduce competitiveness compared to conventional
counterparts. Simultaneously, a lack of standardisation, fragmented policies, and regulatory
uncertainties hinder investment confidence and slow down adoption across industries. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 118
Challenges and Suggestions
Table 4.4: Challenges and suggestions for deployment of new technologies and fuels
Key Barriers Suggestion & Intervention
Technology
Maturity &
High Costs
High risks with new technologies/
fuels
Decarbonisation of hard-to-abate
sectors relies on technologies like
Hydrogen-DRI (Steel), Electric
Crackers (Petchem), and Carbon
Capture (Cement) that are still
in pilot or early commercial
stages. Private sector hesitates to
invest in “First-of-a-Kind” (FOAK)
commercial-scale projects due
to technical risks and uncertain
returns.
Green alternatives have high upfront
costs with uncertain returns (e.g.,
decarbonising steel and cement
requires hundreds of billions USD).
The “Green Premium” (cost
difference between clean and fossil
tech) is high, discouraging early
adoption.
Green and low-carbon suppliers,
particularly MSMEs in sectors
such as waste processing,
recycling, renewable energy, and
energy-efficient technologies
face high working capital
constraints due to delayed
payments and limited access to
affordable short-term finance.
No widely adopted product carbon
labels or taxonomy makes it hard to
distinguish “low-carbon” products.
Implement Pilot Projects: Government along
with Multilateral Development Banks (MDBs)
to support pilot projects in GH
2
-DRI, inert
anodes (aluminium), and CCUS-equipped
cement plants to demonstrate feasibility and
reduce investor risk.
Provide Viability Gap Funding and deploy
blended finance for technologies which
have high upfront costs and risks such as
GH
2
-DRI, CCUS.
Introduce green bill discounting through
TReDS by enabling identification and
preferential financing of invoices associated
with verified green and low-carbon goods
and services. This can be supported through
lower discount rates, priority bidding
windows, or partial risk-sharing mechanisms
for eligible invoices.
Ensure assured offtake through creation of
buyer’s platform for low-carbon products
such as Sustainable Aviation Buyers Alliance,
the Zero Emissions Maritime Buyers Alliance
and the Sustainable Steel Buyers Platform.
These platforms can also leverage Article
6.2/Article 6.4 for enabling trade in low-
carbon products.
Strengthen climate taxonomies to explicitly
include all low-carbon process routes/
technologies, with clear benchmarks, and
thresholds. Harmonise definitions and
reporting boundaries with major international
frameworks to reduce transaction costs and
uncertainty for investors.
Standardisation initiatives: Government and
industry bodies to roll out Type III eco-labels
and rating systems for key materials. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 119
Challenges and Suggestions
Key Barriers Suggestion & Intervention
Domestic
Manufacturing
and R&D
Ecosystem
Import Dependence: India currently
imports key equipment like
high-efficiency electrolysers and
advanced membrane technologies.
Lack of domestic manufacturing
keeps costs high.
R&D Ecosystem: Many critical
industrial technologies for Net Zero
(e.g. advanced green hydrogen-
based processes, CCUS, Small
Modular Reactors (SMRs), inert
anodes, novel binders) are still at
early development or demonstration
stages and require sustained R&D
support. Weak industry-academia
linkages and limited coordinated
research programmes slow progress
on addressing key technology
bottlenecks.
Localisation via PLI: Scale up Production
Linked Incentive (PLI) schemes to cover the
full value chain of clean technologies.
Dedicated industrial R&D missions and
centres of excellence focused on low-
carbon process routes, backed by public
grants and matched industry funding. The
missions may encourage joint ventures
between domestic firms, global technology
providers and research institutions so that
capital, IP and implementation capabilities
are pooled for piloting, scaling and
commercialising of low-carbon technologies.
Raw Materials
Availability
Resource Constraints (Cement):
Adoption of LC3 (Limestone
Calcined Clay Cement) is slowed
by the poor availability and variable
quality of kaolinitic clay.
Alternative Fuels: Industrial players
struggle to source consistent quality
municipal solid waste and biomass
for co-firing, limiting thermal
substitution rates.
Critical Mineral Supply: Domestic
manufacturing of electrolysers
and advanced batteries depends
on imported critical minerals (e.g.,
Nickel, Lithium, Cobalt, Platinum
Group Metals). Global supply
concentration and price volatility
pose a risk to indigenisation targets.
Supply Chain Development: Identify and
create calcined clay clusters to secure raw
material supply.
Secured Bio-Supply Chains: Strengthen the
supply chain for biomass pellets/briquettes
through aggregator incentives and storage
infrastructure to ensure year-round
availability.
Strategic Sourcing: Secure long-term
international offtake agreements for critical
minerals while accelerating domestic
exploration and recycling (urban mining) to
support local manufacturing of clean-tech
components.
For further details, Working Group report on
Critical Minerals (Vol. 10) can be referred..
4.5 JOBS AND TRADE-ENABLERS OF TRANSITION
For the industrial transition to succeed, technical interventions must be supported by an enabling
ecosystem. The scale of investment required is immense, beyond capital; the transition hinges
on a skilled workforce capable of operating new green technologies and a trade strategy that
protects India’s export competitiveness against emerging carbon border taxes. For a detailed
assessment of financing needs and social implications of transition, respective Working Group
reports (Vol. 9 & Vol. 11) can be referred.
18 In cement, ~50% of workers don’t feel ready for digital/ low-carbon tech, >50% lack basic digital literacy, while similar
gaps exist in aluminium, paper sectors. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 120
Challenges and Suggestions
Table 4.5: Challenges and suggestions for managing jobs and trade
Key Barriers Suggestion & Intervention
Employment
Risks and
Opportunities
Workforce skill gap – Fast
adoption of new technologies
risks a shortage of 30–32
million skilled workers by 2025,
rising to nearly 49 million by
2027 (Bhattacharyya & Philip
2024). There’s also a lack of
“skills intelligence” systems to
anticipate future skill needs
from new technologies, leaving
training programs reactive and
workers underprepared (ILO,
2024). Many current workers,
especially in traditional industries,
have low digital and technical
skills, creating a “transition gap”
where new energy-efficient and
low- carbon processes can’t be
adopted readily.
18
Low-carbon transition will phase
out certain carbon-intensive jobs,
risking unemployment in affected
regions if not managed.
Upskill & reskill at scale:
Sector Skill Councils (SSCs) should
institutionalise continuous collaboration with
industry partners and ITIs to ensure that
training curricula and occupational standards
are regularly updated in line with evolving
skill requirements. Certification systems
must be strengthened through employer-led
assessments and periodic third-party audits
so that SSC credentials gain stronger labour
market credibility and wage signalling value.
Greater emphasis must be placed on on-the-
job training and practice-oriented courses to
upskill the existing workforce, particularly in
emerging technologies and new production
processes.
Sector-specific transition skill roadmaps can
identify at-risk occupations and facilitate
reskilling into low-carbon roles, enabling
firms and workers to adapt smoothly to low-
carbon transition pressures.
A national skills intelligence system should
be developed to generate forward-looking
labour market information and forecast
future skill demand at sectoral and regional
levels.
Develop a national policy framework for
worker retraining, relocation support, and
economic diversification in districts affected
by industrial decline. Dedicated funding
mechanisms, including the District Mineral
Foundation for mining regions, can be
leveraged alongside coordinated efforts
by the Skill India Mission and the SCGJ to
transition workers from declining industries
into emerging green sectors.
International
Competitiveness
amid Emerging
Trade Barriers
Carbon border taxes: Indian
steel and aluminium exports face
heightened risk due to the EU’s
CBAM, which comes into effect
in 2026, as India ranks among
the most exposed countries
globally in terms of carbon cost
per dollar of EU trade.
Accelerate low-carbon transition in
export-oriented sectors to upgrade
competitiveness. Leverage domestic
carbon pricing and Article 6.2/6.4 of Paris
Agreement to enable the use of low-carbon
technologies/fuels. Key Barriers Suggestion & Intervention
High import duties on inputs
- Protective tariffs on certain
inputs make downstream Indian
industries less competitive
globally than their peers. For
example, a 30% antidumping
duty on imported bare Printed
Circuit Boards (PCBs) raises
costs for Indian electronics
manufacturers, whereas
competitors in countries like
Vietnam or Bangladesh import
them cheaply.
Lack of green export branding:
Indian products’ sustainability
advantages are not formally
recognised, while global markets
increasingly demand certified
eco-friendly products. Other
markets have initiated programs
towards a global edge in exports
using such labels (e.g., China’s
100 products program).
Evidence-based tariff policy: Institutionalise
a periodic “tariff stocktake” to assess
impact on domestic manufacturing. Recent
example: the 2025 Union Budget removed
a 2.5% import duty on certain PCB subparts
to aid local electronics assembly. Expand
such measures by also revisiting high
duties like the 30% on bare PCBs. Creating
a consultative mechanism with industry
stakeholders can guide tariff adjustments
to improve export competitiveness while
fostering domestic capabilities.
Launch a “Green Stamp” initiative
for exports to certify and showcase
the environmental footprint of Indian
products. Develop standardised assessment
frameworks (analogous to the EU’s PEFCR
guidelines) for priority export sectors, create
credible lifecycle assessment (LCA) data
repositories, and implement digital product
passports that track product sustainability
attributes.
With a recognised Green Stamp label, Indian
products can stand out in global markets for
their low-carbon and sustainable qualities,
converting India’s sustainability edge into a
competitive advantage.
Conclusion
Industrial decarbonisation in India represents both a critical challenge and an immense
opportunity. As one of the fastest-growing economies, India’s industrial sector is central to
its development but also accounts for a significant share of energy use and greenhouse gas
emissions. Moving towards low-carbon pathways will require a mix of technology upgrades,
electrification, adoption of renewable energy, resource efficiency, and innovative financing
mechanisms. At the same time, supportive policies, stronger institutional frameworks, and
capacity-building across industries, particularly in energy-intensive and MSME segments will
be essential. Achieving this transformation can position India as a global leader in sustainable
industrialisation, driving competitiveness, creating green jobs, and ensuring that economic
growth aligns with Net Zero commitments. 1 ANNEXURES Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 124
Annexure - I:
Macroeconomic
Projections
2020202520502075
Population (millions) 1347141115961621
2025-20502050-2070
Real GDP Growth Rate7% (average)3.6% (average)
Table I.1: Macroeconomic projections Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 125
Annexure - II: Emission
Factors for Industrial
Processes and Product Use
IndustryEmission Factor
Cement0.5292 tCO
2
/tonne Clinker Produced
Aluminium
Prebaked Technology: 1.6 tCO
2
/tonne,
1.45 kgCF
4
/tonne,
0.44 kgC
2
F
6
/tonne of aluminium produced
Soda Ash0.323 tCO
2
/tonne Soda Ash
Ethylene
Naphtha Route: 1.73 tCO
2
/tonne Ethylene Produced
Ethane Route: 0.76 tCO
2
/tonne Ethylene Produced
Table II.1: Emission factors for I ndustrial Processes and P roduct Use (IPPU) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 126
Annexure - III:
Grid Emission Factors
(kgCO
2
/kWh)
2020 2025
20502070
CPS NZS CPS NZS
0.713 0.710 0.328 0.257 0.067 0.000
Table III.1: Grid emission factors (kgCO
2
/kWh) Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 127
Annexure - IV:
Cement Composition
Table: % Mix of Raw
Materials
ClinkerGypsum Limestone Fly ash Slag Calcined clay
Ordinary Portland
Cement (OPC)
90% 5% 5% 0% 0% 0%
Portland Pozzolana
Cement (PPC)
60% 5% 0% 35% 0% 0%
Portland Slag
Cement (PSC)
25% 5% 0% 0% 70% 0%
Portland Composite
Cement (PCC)
25% 5% 0% 35% 30% 0%
Limestone Calcined
Clay Cement (LC3)
50% 5% 15% 0% 0% 30%
Table IV.1: Cement composition: % mix of r aw materials Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 128
Annexure - V:
Fertiliser Production
Projection Methodology
Fertiliser use is derived from food grains requirement, which are estimated based on population
growth projections. Then, fertiliser nutrients demand for estimated food grains production is
calculated.
Demand for fertiliser nutrients has been estimated based on the following approach:
f. Estimation of requirement of food grains for the projected population
g. Applying response ratio of fertiliser to food grains to arrive at fertiliser demand for
food grains. This ratio is assumed to improve from 1:5.4 in 2023-24 to 1:10 by 2070,
reflecting more efficient fertiliser use through balanced application and integrated
nutrient management practices.
h. Estimation of total demand of fertiliser nutrients by taking into account the share of
other crops in total fertiliser use.
i. Estimates of demand for individual fertiliser nutrients by taking nutrient use ratio in to
account. Fertiliser nutrient use ratio is assumed to improve gradually from 10.9:4.4:1 in
2023-24 to 4:2:1 by 2047 and remain constant through 2070.
The resulting projections of demand for fertiliser nutrients from 2024-25 to 2069-70 are listed
in the table below:
Table V.1: Projected demand for f ertiliser nutrients from a ll sources (million tonnes)
YearNP
2
O
5
K
2
O Total
2023-24 (Actual)20.5 8.31.9 30.6
2049-5028.5 14.27.1 49.8
2069-7034.3 17.2 8.660.1
From these quantities, gross nutrient requirement from all sources is estimated. The actual
nutrient requirement from chemical fertilisers is projected by subtracting nutrients available
from organic sources from the total nutrient requirement.
Nutrient Realisable from Organic Sources
In recent years, the Government of India has been taking various measures to encourage use of
other sources also along with balanced fertilisation for higher agricultural productivity. Some of
these measures include 100% coating of urea with neem oil, resizing of urea bag to 45 kg from
50 kg, encouragement of the use of nano fertilisers, organic fertilisers, bio-fertilisers, potash Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 129
Annexure - V: Fertiliser Production Projection Methodology
derived from molasses, coverage of higher area under micro irrigation for use of 100% water
soluble fertilisers, promotion of city compost, etc. According to the Annual Report 2022-23 of
National Centre for Organic and Natural Farming, total production of organic fertilisers was
76.4 million tonne in 2022-23. Production of bio fertilisers in carrier form was 325.6 thousand
tonne and liquid based 557 million liters during 2022-23. In addition, during 2023-24, about
204.14 lakh bottles each of 500 mL nano urea and 44.58 lakh bottles each of 500 mL nano
DAP were sold. Further, there was sale/consumption of water-soluble fertilisers of about 220
thousand tonne in 2022-23. Gradual increase in the use of these fertilisers will supplement the
use of conventional fertilisers in the coming years, thereby improving nutrient use efficiency
for higher agricultural productivity. Based on this, gross nutrient requirement from all sources,
nutrient realisable from organic sources, if tapped fully, and actual nutrient requirement from
chemical fertilisers are projected, shown in Figure below:
Table V.2: Demand projection of f ertiliser nutrients (million tonnes)
Year Gross nutrient
requirement
Nutrient realisable from organic
sources and other products
Actual nutrient requirement
from fertilisers
2024-2531.43.527.9
2049-5049.89.440.4
2069-7060.120.939.2
Demand Projection of Major Fertiliser Products
Based on the actual fertiliser nutrient requirement, demand for major fertiliser products viz.
Urea, DAP, NP/NPKs, SSP and MOP has been worked out for the projected years. During 2023-
24, share of nitrogen through Urea to total nitrogen consumption was about 80.5%. To move
towards balance fertilisation, use of Urea would go down gradually to 75% by the end of 2036
and will continue till 2070. In case of phosphate, share of P through DAP to total P consumption
was 60% in 2023-24. It is estimated that its share will come down gradually to 55% by the
end of 2070. However, share of P through NP/NPK and SSP to total P consumption was 31%
and 8.8% in 2023-24, respectively. It is estimated that its share will move up gradually to 33%
and 12%, respectively, by the end of 2070. Similarly, in case of potash, share of K through
MOP was 52.5% in 2023-24 which would improve gradually to 55% by the end of 2070. These
assumptions have been applied to work out the product-wise demand for the projected period.
Table below shows the net demand projection of major fertiliser products such as, Urea, DAP,
NP/NPKs, SSP and MOP from 2024-25 to 2069-70.
Table V.3: Demand projection for m ajor fertiliser products (million tonnes)
Year UreaDAPComplex Fertiliser
2024-25361111
2049-50441514
2069-70511517 Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 130
Annexure - V: Fertiliser Production Projection Methodology
Indigenous Supply Projection of Major Fertiliser Products
Production of urea, DAP and complex fertilisers during 2023-24 was at 31.41, 4.29, and 9.54
million tonnes, respectively. Consumption of urea, DAP and complex fertilisers was at 37.78, 10.81
and 11.07, respectively during 2023-24. Therefore, the level of self-sufficiency during 2023-24 on
urea, DAP and Complex fertilisers was at 83%, 40% and 86%, respectively. For DAP and NP/NPK
complex fertilisers the self-sufficiency is assumed to increase marginal, due to high dependency
on imported raw materials & intermediates. In the case of urea, it has been assumed that at
least one new urea plant of 1.27 million tonne would be commissioned in every five-year period.
Accordingly, the indigenous supply projection of major fertiliser products has been projected. Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 131
Annexure - VI: Equivalency
Factors for the Conversion
of Crude Oil to Oil Products
ProductTypical Yield (% of Crude Oil)
Petrol20-25
Diesel38-45
ATF/SKO8-10
Naphtha2-2.5
LPG4-5
Fuel Oil10-12
Bitumen/Pet Coke9-10
Sulphur0.5-1
Fuel & Loss8-10
Table VI.1: Equivalency factors for the conversion of crude oil to oil products Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 132
Annexure - VII: Sector Specific Circularity Challenges & Suggestions
Annexure - VII: Sector
Specific Circularity
Challenges &
Suggestions
ChallengeSuggestions
Steel
Quality of scrap is low
There is limited deployment of advanced
sorting and processing technologies like
shredders, magnetic separators, and optical
sorters.
Contaminated scrap results in less yield and
more energy consumption.
Dependence on imports raises risks of
export restrictions, taxes, and conservation
measures.
Disruptions to the supply chain (for example,
conflicts and a sudden increase in shipping
costs) increase price volatility
Better pre-treatment
methods for scrap, for
instance, shredding
ELVs and removing
contaminants, must be
developed.
Scrap quality standards as
well as inspections should
be introduced.
Scrap sourcing must be
diversified and supply
chains made resilient.
Cement
Construction and demolition (C&D) waste
is often contaminated and inconsistent,
making processing difficult. India generates
an estimated 150–500 million tonnes of C&D
waste annually, but only a tiny fraction is
recycled.
Limited logistical capability to collect and
transport waste from demolition sites to
recycling plants.
Limited urban space for establishing
recycling facilities.
Limited technical capacity to produce
uniform, high-quality recycled aggregates
or fuel (RDF) from municipal waste.
Heterogeneous waste fuels (RDF from
municipal solid waste) often have inconsistent
calorific value and high moisture or chlorine
content, which can affect kiln operations.
Cement kilns need reasonably uniform, high-
energy-value fuel feed. Indian municipal
waste, in contrast, is often wet and mixed
with inert material.
Cheap virgin materials, lack of tipping fees
or financial incentives for using scrap make
recycled alternatives less competitive.
Invest in advanced
processing technologies
(such as smart crushers,
heat/mechanical
treatment) to separate
cement paste from
aggregates.
Pre-processing like
drying and shredding is
required to make RDF,
and removing problem
elements (chlorides, heavy
metals) is necessary to
avoid kiln corrosion or air
emissions issues.
Collection and transport
of C&D waste should be
organised.
Financial incentives
such as tipping fees for
waste usage should be
introduced.
Table VII.1: Sector specific circularity challenges & sugges tions Scenarios Towards Viksit Bharat and Net Zero - Sectoral Insights: Industry 133
Annexure - VII: Sector Specific Circularity Challenges & Suggestions
ChallengeSuggestions
Aluminium
Scrap quality issues (similar to steel), costly
segregation, and dominance of informal
recycling.
Exposure to global supply shocks due to
import dependence.
Scrap imports are taxed at higher rates than
finished aluminium, thereby discouraging
recycling.
Contradictory positions taken by primary
producers and recyclers adds to the problem.
For example- Aluminium Association of
India (AAI) and FIMI (Federation of Mineral
Industries) support 10% duty whereas MRAI
(Metal Recycling Association of India) wants
zero duty.
Apply zero or minimal
import tariffs on metal
scraps (e.g. 2.5%).
Prioritizing the setting
up of Zorba sorting
technology, with a
focus on promoting
domestic manufacturing
of advanced sorting
equipment
Provide subsidies for
setting up advanced
sorting and smelting
facilities.
Encouraging joint
ventures or strategic
partnerships between
automobile manufacturers
and secondary aluminium
smelters
Actively attracting
foreign direct investment
from global auto parts
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upskilling-and-reskilling-in-the-cement-industry-statistics VOL. 4
SECTORAL INSIGHTS:
INDUSTRY
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO
VOL. 11
SOCIAL IMPLICATIONS
OF TRANSITION
SCENARIOS TOWARDS VIKSIT BHARAT AND NET ZERO