Ahead of the Union Budget for 2026–27, industry body Assocham has urged the government to roll out incentives for hydrogen-based direct reduced iron (DRI) production and concessional green finance to help the steel sector transition towards low-carbon manufacturing, PTI reported.In its pre-Budget recommendations, the chamber also called for incentives to promote waste-heat recovery systems and the setting up of renewable captive power plants, saying these measures are critical to reducing emissions from steelmaking. It noted that decarbonisation poses both a challenge and an opportunity, and targeted policy support could accelerate the shift to sustainable production.Assocham further advocated incentivising scrap collection and recycling, underlining that strengthening domestic recycling infrastructure through skilling initiatives is essential to reduce India’s dependence on imported raw materials.Despite India being the world’s second-largest steel producer after China and recording a healthy growth rate of 8–9 per cent, the sector is facing mounting pressures, the industry body said. Elevated input costs, a depreciating rupee and heavy reliance on imported coking coal — due to negligible domestic mineable reserves — continue to weigh on producers.The chamber also flagged concerns over iron ore availability, noting that production has remained stagnant and several auctioned mines are yet to commence operations. Rising steel demand and continued exports of iron ore are tightening domestic supply, pushing up costs for local mills, it said.Assocham said the upcoming Budget presents an important opportunity to position India as a global manufacturing hub for steel and value-added products under the ‘Make in India’ initiative. To support this goal, it has called for promoting iron ore beneficiation, removing import duties on critical raw materials and rationalising royalty calculations to address issues of double taxation.The body also stressed the need to incentivise research and development in steel recycling, alloy innovation and process digitisation, saying this would improve productivity and reduce dependence on imports of speciality steel.