India is the world’s largest producer of sponge iron with a host of coal based units, located in the mineral-rich states of the country. Over the years, the coal based route has emerged as a key contributor and accounted for 76% of total sponge iron production in the country (20.37 mt in 2011-12; prov.). Capacity in sponge iron making too has increased over the years and stands at around 35 mt.

Sponge Iron is a metallic product formed by the reduction of iron ore at temperature just below the fusion point of iron. This product has derived the name "Sponge Iron" due to its porous nature.