India's draft National Steel Policy landed on Saturday with a headline built for front pages: 604 million tonnes of crude steel capacity by 2047, up from 220 MT today. Nifty Metal duly rose on Monday.

The number that will actually move P&Ls sits in an assumptions footnote under the raw-material demand table. To model India's 2047 ore, coal and scrap needs, the Ministry of Steel assumes a route mix of BOF 55%, EAF 30%, IF 15%. Today, per the same document, the split is BOF about 43%, electric arc furnace (EAF) about 19% and induction furnace (IF) about 38%. The text says it plainly: BOF share "is likely to increase above 50%", the EAF share "is also likely to increase... while the contribution from IF route is expected to decrease."

So the EAF share rises by half again while the induction-furnace share — over a third of national output today — shrinks to 15%. That is not a volume story. It is a transfer of share between two kinds of furnace, and one of them consumes an expensive consumable the other does not.

Graphite electrodes only go into EAFs

An electric arc furnace melts scrap by striking an arc through graphite electrodes, which burn away and must be replaced. Induction furnaces melt by electromagnetic induction and use no electrodes at all. India's two listed electrode makers have said for years that this is why India is a poor market for them.

HEG puts it in writing. Its FY2026 annual report (filed 25 June 2026) notes that Indian steel production "is predominantly through the blast furnace route, with a substantial share also produced through induction furnaces, which do not form part of the Company's customer base." The same line appears in its FY2025 report and a February 2024 call. HEG runs what that report calls the world's largest single-site graphite electrode plant, at 100,000 tonnes a year, yet exports ran above 70% of sales in the period covered by that 2024 call — an Indian company that mostly sells abroad, because at home a third of the steel is made in furnaces that cannot use its product. The FY2026 report adds that green steel will strengthen "demand for EAF-linked inputs such as graphite electrodes"; its FY2025 report puts roughly 170–180 MT of new EAF capacity excluding China arriving by 2030, implying about 200,000 tonnes of extra electrode demand. Graphite India is the other toll-taker: 98,000 tonnes a year across Durgapur, Nashik and Nurnberg, exports about half of revenue. Its FY2026 annual report (8 July 2026) says "policy direction continues to favour higher scrap-based steel production over the medium term," with EAF output growing faster than BOF.

One producer is already past the 2047 target

The policy's decarbonisation goal is to cut average emission intensity from 2.54 tonnes of CO2 per tonne of crude steel to roughly 1.54 by 2047, against a global average near 1.92.

Vardhman Special Steels is already well below that. Its FY2026 annual report (25 August 2026) — which independently cites the 2.54 national and 1.91 global figures — reports carbon intensity of 0.48 tonnes per tonne, down from 0.73 in its FY2024 report, after its solar plant began supplying roughly 9 crore clean units a year. It runs the EAF route and since September 2025 has operated a closed-loop arrangement returning cold-rolled scrap from Maruti Suzuki plants to Ludhiana for remelting.

What the majors have disclosed about the bill

JSW Steel's FY2026 annual report (2 July 2026) discloses Scope 1 and 2 intensity of 2.423 tCO2 per tonne of crude steel, against 2.436 a year earlier — a 0.5% improvement, on a path needing roughly a 39% cut. Tata Steel has published what switching routes costs. Its Q2 FY26 results presentation details the UK shift to a roughly 3 MTPA scrap-based EAF costing £1.25 billion, including £500 million of UK government funding, taking intensity to about 0.4 tCO2 per tonne on commissioning. Its India roadmap to 2030, per investor presentations from November 2025 and February 2026, is a scrap-based EAF at Ludhiana, Punjab, plus higher scrap in the basic oxygen furnace. India's largest blast-furnace producer's own near-term lever is the same route shift the policy models.

The leg nobody is pricing

The policy also projects sponge iron/DRI demand rising from 60 MT to 143 MT by 2047, because its assumed EAF charge mix is 50% DRI — scrap triples to 123 MT but still covers only about 21% of production. Godawari Power & Ispat's FY2026 annual report (25 August 2026) calls its new 2 MnT gas-based pellet plant "India's only plant of its kind and... inherently CBAM-compliant," on a gas grate-kiln it describes as India's first, with a fuel switch cutting 2 lakh tonnes of CO2 a year. Sponge iron production rose 9% to 6.50 lakh MT.

What retail investors should do

Be clear what this is: a draft, open for comment until 30 October 2026, on a 2047 horizon. Route-mix assumptions in an annexe are not binding targets, and none of this changes next quarter's earnings. The electrode makers are priced off a global market flooded by Chinese steel exports — both companies' filings describe depressed pricing, and Indian policy will not fix that. Treat the document as a reason to know which furnace a company owns, not as a trade.

The screen is filing-checkable. For any steel name you hold, find its emission intensity in the BRSR or annual report and compare it to 1.54. Companies already below it — overwhelmingly EAF and scrap-based — hold an asset the Carbon Credit Trading Scheme is built to reward; the policy says CCTS should incentivise scrap use by recognising its lower carbon footprint. Companies above 2.4 have a capex programme they have not fully costed in public; Tata Steel's UK numbers give the order of magnitude. And if you own a small-cap secondary producer, check whether it melts in an induction furnace. The policy counts roughly 2,550 secondary units holding about 47% of national capacity, running on "ageing and relatively inefficient technologies." That is the segment whose share its own model halves.

Data sourced from company filings on NSE via Xaro.