A landmark analysis by the Confederation of Indian Industry (CII) illuminates a transformative pathway for India’s crucial steel sector, asserting that a strategic mandate for green steel utilization in public projects could ignite a substantial surge in demand, reaching up to 16 million tonnes per annum (mtpa) by the fiscal year 2029-30. This projected uplift, stemming solely from government-linked initiatives, underscores the profound leverage that public procurement wields in accelerating the nation’s industrial decarbonization agenda and fostering a sustainable economic future. The study, an industry readiness assessment developed by CII’s Green Business Centre with crucial support from Climate Catalyst, highlights not just a market opportunity, but a strategic imperative for India to meet its ambitious climate goals while future-proofing its industrial base.
The sheer scale of India’s public procurement landscape positions it as an unparalleled catalyst for market transformation. Annually, public procurement in the country accounts for an astounding ₹45-50 trillion, with government-linked projects alone consuming approximately 31.6 mt of steel in 2023-24. This substantial consumption footprint, however, carries a significant environmental cost, having generated nearly 70 million tonnes of carbon dioxide emissions in the last fiscal year. With the Union Budget for 2026-27 earmarking a robust ₹12.2 trillion for capital expenditure, the potential to redirect even a fraction of this colossal demand towards low-carbon steel alternatives presents an unprecedented opportunity for substantial emissions reductions, remarkably with only a marginal impact on overall project costs.
The CII study’s findings are particularly compelling as they demonstrate a tangible readiness across the steel value chain. A remarkable 93% of surveyed steel producers—representing 26 out of 28 companies and an aggregated crude steel capacity of 88 mtpa—have indicated their capability to supply certified green steel at scale. This readiness is, however, contingent upon the establishment of a clear, notified mandate and a transparent mechanism to recover the incremental costs associated with green production. Proposed measures to bridge this cost differential include the implementation of a ‘green premium,’ targeted Goods and Services Tax (GST) concessions, or the strategic utilization of carbon credit offsets, reflecting a pragmatic approach to market transition.
On the demand side, a cohort of twelve major public procurers expressed their willingness to integrate a green steel mandate, provided certain foundational enablers are firmly in place. These critical prerequisites include a nationally notified mandate with explicit thresholds, readily available tender clauses and robust Monitoring, Reporting, and Verification (MRV) templates, specialized training for procurement teams, and limited, time-bound fiscal support. Such fiscal mechanisms could encompass a predefined ‘green margin’ within the schedule of rates (SoR), temporary GST relief, or carbon offsets for an initial three-year period, designed to ease the transition and absorb initial cost differentials. This dual readiness from both producers and procurers signals a ripe environment for policy intervention.
The report recommends an initial activation floor of a 26% green steel mandate for public projects exceeding ₹1 crore in value, commencing from the fiscal year 2027-28. This initial step is envisioned as a foundational move, with a clear pathway to progressively elevate the mandate to 37% post-2029-30. Under both scenarios, demand for green steel is projected to experience steady growth, aligning seamlessly with India’s ambitious and rapidly expanding infrastructure pipeline. The environmental dividends of such a policy are substantial: a 26% mandate could avert up to 20.9 mt of CO2 emissions by 2029-30, while a more ambitious 37% threshold could prevent an impressive 29.7 mt. To put this into perspective, the higher mandate’s impact on emissions is equivalent to removing 6-9 million cars from the roads annually, underscoring the profound potential of this policy lever.
Economic analyses conducted as part of the study revealed that the adoption of green steel would incur only a marginal increase in total project costs, ranging from a mere 0.2% to 1.2%. Case studies involving flagship initiatives such as Pradhan Mantri Awas Yojana-Urban 2.0, various metro rail systems, and Indian Railways projects consistently demonstrated this minimal financial impact. This negligible cost premium, when weighed against the monumental environmental benefits and the long-term strategic advantages of fostering a green industrial base, presents a compelling economic rationale for immediate policy action. K.S. Venkatagiri, Executive Director of CII, emphasized this point, stating that green public procurement (GPP) could play an unparalleled catalytic role in accelerating the steel sector’s transition. By prioritizing low-emission steel in government-led infrastructure, housing, and transport projects, public demand can effectively bridge the existing cost gap between conventional and green products, thereby sending clear, unequivocal signals for investment and innovation across the industry.
Sakshi Balani, Director for India and Director of Policy at Climate Catalyst, echoed this sentiment, arguing that a definitive mandate could propel the sector forward more rapidly than subsidies alone. GPP, she highlighted, represents the "missing demand signal" capable of unlocking large-scale investment and nurturing a robust 16-24 mtpa green steel market by the end of the decade. This strategic demand-side intervention is crucial, as it provides the necessary certainty for producers to invest in capital-intensive green technologies, knowing there will be a market for their lower-carbon products. Globally, leading economies like the European Union are already leveraging similar mechanisms, including carbon border adjustment mechanisms (CBAM), to encourage cleaner production, making India’s move towards GPP not just an environmental choice but a strategic economic one to maintain global competitiveness.
The study also delves into the industry’s trajectory, noting that based on draft Carbon Credit Trading Scheme (CCTS) trajectories and Green Steel Taxonomy thresholds, some integrated producers are anticipated to achieve "three-star" categories from 2026-27 onwards. This signifies a two-stage acceleration in the availability of genuinely green steel throughout the decade, suggesting that the supply side will be increasingly ready to meet an incentivized demand. However, systemic constraints remain a challenge. A projected scrap shortage of 20-30 mtpa by 2030, inadequate upstream emissions disclosure from critical suppliers like iron ore and coke, fragmented procurement systems across states and public sector undertakings, and a persistent lack of harmonized MRV formats collectively pose significant hurdles to a seamless transition.
To mitigate these identified gaps and facilitate a robust green steel ecosystem, the report proposes several critical interventions. Foremost among these is the establishment of an inter-ministerial green public procurement steel task force, to be housed under the steel ministry. This task force would be charged with overseeing the rollout and ensuring coherent coordination across procurement, finance, and industrial policy domains. Furthermore, the report advocates for mandatory upstream emissions disclosure across all key inputs—iron ore, pellets, scrap, and energy—to support credible, product-level accounting under the Green Steel Taxonomy. Such transparency is vital for validating green claims and preventing greenwashing, ensuring the integrity of the entire value chain.
With established institutional mechanisms already in place, such as the General Financial Rules 2017 and the CCTS, the framework for action is largely present. The study advocates for a sequenced rollout, beginning with a formal mandate announcement in 2026-27, followed by the integration of green steel considerations into the Schedule of Rates, the development of standardized tender templates, and the initiation of pilot projects. This phased, strategic approach is designed to allow public procurement to absorb up to 24 mtpa of certified green steel by 2029-30, gradually building capacity and expertise.
In conclusion, the CII study powerfully asserts that green public procurement stands as arguably the single most impactful tool available to translate India’s ambitious steel sector climate aspirations into measurable, tangible action within this decade. By consciously embedding sustainability into its massive infrastructure development, India not only future-proofs its public assets against evolving environmental standards but also significantly bolsters its global competitiveness in a world increasingly prioritizing low-carbon industries. This strategic shift promises not just environmental dividends but also a pathway to enhanced industrial innovation, job creation, and a stronger, more resilient domestic manufacturing base, positioning India as a leader in the global transition to a green economy.
