India plans to roll out a Rs 50 billion ($570 million) programme to encourage steel producers to reduce emissions, a senior government official stated. The scheme will particularly target smaller firms, which contribute nearly half of the nation’s steel output, Sandeep Poundrik, Secretary of the Steel Ministry, said at the FT Energy Transition Summit in New Delhi on Wednesday.

Steel demand in India is rising due to a wave of infrastructure projects and growing housing requirements. While many small steel plants are being established because they are easier to set up, they are also highly polluting.

The initiative forms part of the government’s broader strategy to reduce the environmental impact of its hard-to-abate steel sector. Incentives under the programme will support India’s goal of achieving net zero emissions by 2070 and facilitate trade with the European Union, which penalises emission-intensive imports through its border carbon adjustment mechanism.