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

India has become the largest single source of additional global steel demand. That makes the country more important to producers, policymakers and the industry’s global representative body. Sitharaman therefore invited Worldsteel to establish an office in India as the association enters its 60th year.

The invitation follows Worldsteel’s earlier decision to open an office in Beijing in 2006, when China drove much of global demand growth. India now plays a comparable role, with its share of global steel production rising from 5.2% in 2014 to about 9%.

India’s importance is also visible in its output and consumption. Crude steel production rose 10% to 165 million tonnes in 2025, while finished steel consumption reached 164 million tonnes. An Indian office could give Worldsteel a stronger base for understanding demand, production, technology and decarbonization in a fast-growing market.

Worldsteel is the global steel industry’s representative association. The article describes it as the industry’s global representative body and refers to its general assembly in New Delhi. Its role is to provide a shared forum for steel producers and industry stakeholders as they address common challenges.

Those challenges include weakening output, excess capacity, uncertain trade rules, energy pressures and emissions reduction. Worldsteel’s outlook also helps identify where demand is growing. Its April 2026 short-range outlook projected that India would provide about twice the net increase in global steel demand in 2026 and around 40% of the increase in 2027.

The association’s presence matters because steel markets cross borders. Its work can support shared data, industry coordination and discussion of technology and carbon measurement. Sitharaman’s invitation reflects India’s expanding role and her view that Worldsteel should have a stronger presence where demand is growing fastest.

Global steel surplus refers to capacity that exceeds what markets can reasonably absorb. It creates pressure on producers, prices and trade because mills may keep operating even when demand is weak. Sitharaman identified excess capacity as a structural problem facing the industry.

The OECD projects global excess capacity to rise from 600 million tonnes in 2024 to 720 million tonnes by 2027. The projected 2027 surplus would exceed the combined steel production of all OECD members. Meanwhile, global crude steel production fell 2% to 1.85 billion tonnes in 2025 and another 0.7% during January-August 2026.

This mismatch makes trade disputes more likely. Sitharaman said the industry must expand where genuine demand exists and correct structural imbalances. She called for multilateral rules on subsidies that sustain uneconomic capacity, backed by transparent data and rules-based trade.

Sitharaman’s argument is that carbon tariffs target the way steel crosses a border, not the excess capacity causing oversupply. If one market becomes harder or costlier to enter, surplus steel may simply move to another market. The underlying mills and production capacity remain.

She said successive unilateral tariffs merely redirect surplus steel from one market to another. Her proposed alternative is multilateral discipline on subsidies that keep uneconomic capacity operating. This approach would require transparent data and rules-based trade, alongside coordinated emissions reduction.

The issue is urgent because global excess capacity is projected to increase from 600 million tonnes in 2024 to 720 million tonnes by 2027. Sitharaman still supports decarbonization, but she wants it linked to technology, credible emissions measurement and fairly shared transition costs. Her position is that carbon measures should not substitute for solving structural oversupply.

The European Union’s Carbon Border Adjustment Mechanism, or CBAM, is a border measure that makes carbon-related costs relevant to imported goods according to their emissions. The article says CBAM has entered its definitive phase, increasing the importance of emissions measurement for steel exporters.

For a steel producer selling into Europe, the key mechanism is carbon data linked to each shipment. Exporters need to measure and document the emissions associated with their steel so carbon-related costs can be assessed. Sitharaman highlighted traceable carbon data for every tonne shipped as an increasingly important condition for premium markets.

CBAM therefore affects both market access and competitiveness. Producers with credible emissions information and lower-carbon technology may be better placed to serve European buyers. India is pursuing scrap use, renewable electricity, direct reduced iron and green hydrogen, but Sitharaman also called for a fair sharing of transition costs and a pace consistent with development.

India is becoming a major source of steel-demand growth because its economy is building infrastructure and expanding industrial capacity. Construction and infrastructure account for nearly two-thirds of India’s steel consumption. Roads, railways, ports, airports and metro networks therefore create sustained demand for producers.

Public investment is a central mechanism. Union government capital expenditure increased sixfold, from about ₹2 lakh crore in 2014-15 to ₹12.2 lakh crore in 2026-27. Domestic finished steel consumption more than doubled over the past decade, reaching 164 million tonnes in 2025-26. Consumption has exceeded production for two consecutive years.

India’s production is expanding too, but domestic needs remain strong. Crude steel output rose 10% to 165 million tonnes in 2025 and another 6% during January-August 2026. Worldsteel projects India will provide about twice the global demand increase in 2026 and around 40% in 2027.

Steel is produced mainly by turning iron ore into iron and then refining it into steel, or by melting steel scrap in an electric furnace. The molten metal is adjusted to the required composition, cast into forms and rolled into products. The article focuses on reducing emissions from these stages rather than detailing the process.

Conventional ore-based production commonly uses coal or coke to supply heat and remove oxygen from iron ore. That creates carbon dioxide. Electric furnaces can also emit indirectly when their electricity comes from fossil fuels. As output rises, energy use and process emissions often rise too, although scrap, renewable electricity and improved efficiency can lower emissions per tonne.

This explains India’s proposed transition measures. They include greater scrap use, renewable electricity, direct reduced iron and green hydrogen. Four green-hydrogen steelmaking pilot projects have been awarded. Artificial intelligence could improve furnace and rolling-mill efficiency, while nuclear technologies may provide reliable low-carbon electricity.