NEW DELHI: Mandating the use of certified green steel in government projects could unlock up to 16 million tonnes per annum (MTPA) of demand by FY2030, even at a 26% procurement threshold, according to a study by the Confederation of Indian Industry (CII). A higher 37% mandate could create demand of up to 24 MTPA and help avoid nearly 29.7 million tonnes of CO₂ emissions by 2030.
The study argues that India’s steel sector is prepared for a phased Green Public Procurement (GPP) framework, which could create the country’s first large-scale assured market for certified low-carbon steel starting FY28.
Government procurement as demand anchor
Public procurement in India accounts for an estimated ₹45-50 lakh crore annually. Government-linked projects consumed about 31.6 million tonnes of steel in FY24, resulting in around 70 million tonnes of CO₂ emissions, the study noted.
The report estimates that even a modest 26% green steel mandate for public projects valued above ₹1 crore from FY28 could unlock up to 16 MTPA of certified green steel from both primary and secondary producers by FY2030. A 37% mandate post-FY2030 could expand demand to 24 MTPA.
At a national scale, a 26% mandate could help avoid up to 20.9 MtCO₂ by FY2030, while a 37% threshold could avoid up to 29.7 MtCO₂, equivalent to removing roughly six to nine million cars from the road annually.
Industry says it is ready
The study surveyed 28 steel producers representing 88 MTPA of crude steel capacity and 12 major public procurers. It found that 93% of producers (26 out of 28 surveyed) are prepared to supply certified green steel at scale, subject to a formal mandate and transparent cost recovery mechanisms such as a green premium, GST concessions, or carbon credit offsets.
Public procurers surveyed also expressed readiness to implement a green mandate, provided certain enablers are in place. These include a notified national mandate with defined thresholds, standardised tender clauses and monitoring, reporting and verification (MRV) templates, basic training for procurement teams, and time-bound fiscal support in the initial years.
With public capital expenditure pegged at ₹12.2 trillion for FY2026-27, the report argues that integrating green steel into infrastructure procurement could deliver long-term emissions savings while having only a marginal impact on overall project costs.
Limited cost impact
CII evaluated three case studies, PMAY-Urban 2.0, Metro Rail projects and Indian Railways, to assess the cost implications of green steel adoption. The analysis indicates that using certified green steel would increase total project costs by only 0.2% to 1.2%.
The report positions the mandate as a mechanism to “future-proof” public infrastructure and avoid higher retrofit costs later, while accelerating domestic green steel capacity by FY2030.
Policy and systemic gaps
The study highlights several structural constraints that require policy attention, including a projected 20-30 MTPA scrap shortage by 2030, insufficient upstream emissions disclosure by iron ore and coke suppliers, fragmented procurement systems across states and public sector undertakings, and lack of harmonised MRV formats.
It recommends setting up a dedicated inter-ministerial GPP Steel Task Force under the Ministry of Steel to coordinate rollout, address bottlenecks and align procurement, finance and industrial policy. It also calls for mandatory upstream emissions disclosure to enable credible product-level accounting.
Additionally, updating India’s Schedule of Rates (SoR), which guides pricing and specifications in public tenders, to formally recognise certified low-carbon steel could streamline adoption across government projects.
Roadmap to FY2030
The report proposes a sequenced rollout beginning with mandate announcement in 2026-27, followed by SoR integration, standardised tender templates, 3-5 high-visibility pilot projects, and transitional fiscal support for early adoption.
With institutional mechanisms such as the General Financial Rules (GFR) 2017, the Carbon Credit Trading Scheme (CCTS) and certification systems already in place, the study concludes that green public procurement represents one of the most effective demand-side tools to accelerate decarbonisation of India’s steel sector this decade.
