THEBUSINESSBTES BUREAU

NEW DELHI, FEBRUARY 26, 2026

Mandating the use of green steel in public procurement could unlock up to 16 million tonnes per annum (MTPA) of demand from government projects alone by FY2030, positioning India to create its first large-scale assured market for certified low-carbon steel, according to a new industry readiness assessment by the Confederation of Indian Industry (CII) – Green Business Centre, supported by Climate Catalyst.

The study notes that public procurement in India accounts for ₹45–50 lakh crore annually, with government-linked projects consuming about 31.6 million tonnes of steel and generating nearly 70 million tonnes of CO₂ in FY2024. Even a modest 26 per cent mandate for certified green steel could significantly accelerate industrial decarbonisation while reinforcing global competitiveness. A higher 37 per cent mandate could unlock up to 24 million tonnes of demand and help avoid up to 29.7 MtCO₂ by 2030 — equivalent to taking roughly nine million cars off the road each year.

Drawing on inputs from 28 steel producers covering 88 MTPA of crude steel capacity and 12 major public procurers, the report finds strong supply-side readiness, with 93 per cent of producers willing to supply certified green steel at scale once a mandate is notified and supported by transparent cost-recovery mechanisms such as premiums, GST concessions or carbon-credit offsets. Procuring agencies also expressed readiness, subject to clear policy enablers including notified thresholds, standardised tender clauses, MRV templates, brief training and time-bound fiscal support.

With the Union Budget raising public capital expenditure to ₹12.2 trillion for FY2026-27, the report underscores a major fiscal opportunity: shifting even a portion of steel demand to certified green steel could deliver long-term emissions savings while only marginally increasing total project costs. Case studies of PMAY-Urban 2.0, metro rail systems and Indian Railways projects show overall cost increases of just 0.2 to 1.2 per cent.

The analysis proposes a 26 per cent mandate as an activation floor for public projects above ₹1 crore from FY2028, with a pathway toward 37 per cent post-FY2030. Demand is projected to rise steadily alongside infrastructure expansion, driving investments in 4- and 5-Star taxonomy-aligned steel. ArcelorMittal Nippon Steel India’s Hazira plant is expected to be the first integrated facility to enter the 3-Star category by FY2027, followed by Tata Steel’s Jamshedpur and Kalinganagar units by FY2028 and JSW’s Bellary, Dolvi and Salem plants by FY2030, subject to emission-reduction progress.

The report highlights the strategic role of updating the Schedule of Rates to formally recognise certified low-carbon steel, enabling streamlined adoption across tenders. It also recommends establishing an inter-ministerial GPP Steel Task Force under the Ministry of Steel and mandating upstream emissions disclosure across raw material and energy inputs.

Identified constraints include a projected 20–30 MTPA scrap shortage by 2030, fragmented procurement systems and the absence of harmonised MRV formats. Addressing these gaps, the study says, is critical for scaling GPP.

K S Venkatagiri, Executive Director, Confederation of Indian Industry and Chairman, Global Ecolabelling Network Board noted, “Green Public Procurement can play an important role in helping India’s steel sector move toward lower-carbon production. By encouraging the use of certified low-emission steel in public infrastructure, housing, and transport projects, government demand can support market development for cleaner steel and help reduce the cost gap between green and conventional products. This can also provide clearer signals for innovation and investment in cleaner technologies, and contribute to lower embodied carbon in the built environment. Such measures could improve the competitiveness of the steel industry while aligning with India’s climate goals..”

Sakshi Balani, Director, India & Director, Policy, Climate Catalyst, added, “This study makes one thing very evident, that a clear green steel mandate can shift India’s steel sector faster than any subsidy or technology push. We don’t need to wait, GPP is the missing demand signal that can immediately cut emissions, unlock large scale investment and move the industry into a 16-24 MTPA green steel market by FY2030. With minimal cost impact and massive climate returns, it is the most realistic tool India has, to drive real transition this decade.”

The study concludes that a sequenced rollout — mandate announcement in 2026-27, SoR integration, standardised tenders, pilot projects and transitional fiscal support — could enable public procurement to absorb up to 24 MTPA of certified green steel by FY2030, making GPP the single most impactful lever to translate India’s steel decarbonisation ambitions into measurable action this decade.