India, as the world's second-largest steel producer, is under pressure as the European Union tightens environmental regulations, emphasizing carbon neutrality. With 25% of Indian steel exports going to Europe, compliance with stricter carbon rules is vital to avoid financial penalties. A forecast by Rystad Energy shows India and Russia facing high carbon costs in steel production by 2034. The EU's Carbon Border Adjustment Mechanism (CBAM) will assign a carbon cost to imports based on emissions, potentially impacting Indian steel due to its carbon intensity. To mitigate this, Indian steelmakers are transitioning to low-carbon alternatives like green hydrogen and natural gas-based ironmaking. The government introduced a green steel classification system to incentivize emission cuts, with major producers like Tata Steel and JSW Steel setting net-zero emission targets. Investments in renewable energy, circular economy initiatives, and capacity expansions are key strategies to balance growth with emission reductions. Despite progress, Indian steelmakers must accelerate efforts to meet EU standards to avoid significant carbon taxes and maintain competitiveness.