Climate change and consciousness are set to bring about a structural shift in the world of manufacturing. Steel production is inherently a carbon-emitting sector and with fast-changing carbon footprint consideration, is India set to lose its low-cost advantage?

To understand this and the next phase of the structural shift in the Indian steel industry and Tata Steel's strategy to be future-ready, CNBC-TV18’s Nisha Poddar spoke with Koushik Chatterjee, the executive director and CFO at Tata Steel. Chatterjee actively participates in various sustainability and environment-conscious fora across the world for the company.

Throwing more light on how the steel industry is developing a decarbonisation pathway, he said steel is a foundation for any economy and the world cannot do without steel, therefore, most manufacturing companies including steel companies are developing their own decarbonisation pathway either through initiatives which are important for the legacy assets, as well as when companies which are growing especially in countries like India, or other developing countries, where the growth in steel is in required, they are looking at a hybrid model of choosing alternate technologies, which then becomes one of the ways in which the decarbonisation can be achieved.

He said, “The way in which we are working today as a universe, the climate is become a very important part for business, for countries and for society and manufacturing industry, big steel or other processing industries or automotive or oil and gas do have a carbon footprint which needs to get abated and steel is one of the hard to abate sectors, primarily because technologies is not available in the scale in which we can abate and yet manufacture the grades of steel that the customers want.”

He further added, there is a huge work going on in the steel industry as well as in other industries to reduce the impact of carbon. Most companies or industries are looking at developing a decarbonisation pathway because these things don't happen in a month or a quarter or even years it takes some time to actually mature and scales in the way in which it can meaningfully mitigate the emission levels.

When asked if thought if India could lose its vantage point of being a low-cost producer for steel? He does not think so because India is in a very good position on account of multiple reasons.

“One, it has the factors of steel which is what makes it globally competitive as an industry in India. We have the skills we have the raw materials, we have the customers, so you can't have a more favourable combination as we have seen in the past,” he said, adding that as far as decarbonisation is concerned, India yet doesn't have a carbon market, there is no allowance market or a trading market but India is a signatory to the Paris Agreement and, and will comply to the, to the undertakings that the country has given and is well on its course.

According to him, as India grows bigger and bigger and puts in a lot more steel per capita of its population. There will be ways in which that pathway will get developed through alternate technologies for new technologies, in which carbon can be captured and used and utilised for producing other products.

As we move towards making hydrogen as the fuel for the future. We already have a hydrogen mission in the country and as we move towards it and as hydrogen costs come down, and technology is adapted to it, there is a pathway that India can build for itself over the next 10-15 years.

As incrementally, we become more steel-consuming, we will have the ability to develop new technologies indigenously, as well as from best practices across the world to ensure that we remain competitive, he added.

“I am very optimistic about India's future even in a decarbonized world, “said Chatterjee.

Watch the accompanying video for the entire interview