Green Steel Mandate Could Unlock 16 MTPA Demand by FY2030: CII Study

India’s transition towards sustainable industrial practices is gaining momentum, with the steel sector emerging as a critical focus area. A new industry readiness assessment by the Confederation of Indian Industry Green Business Centre, supported by Climate Catalyst, reveals that mandating 26 percent green steel in public procurement could unlock up to 16 million tonnes per annum of certified green steel demand by FY2030.

The report underscores the massive influence of government procurement, which currently accounts for ₹45–50 lakh crore annually. Public projects alone consumed around 31.6 million tonnes of steel in FY2024, resulting in nearly 70 million tonnes of carbon emissions. Introducing a 26 percent green steel mandate could potentially reduce emissions by 20.9 million tonnes of CO2 by 2030. If the mandate is increased to 37 percent, the demand could rise to 24 MTPA, with emissions reduction reaching up to 29.7 million tonnes.

Interestingly, the study indicates strong industry readiness. Nearly 93 percent of surveyed steel producers have expressed their ability to supply certified green steel, provided there are supporting mechanisms such as price premiums, GST concessions, or carbon credit frameworks. This reflects a clear willingness within the industry to align with sustainability goals, provided policy support is structured effectively.

On the demand side, public procurement agencies have also shown readiness to implement such mandates. However, they have highlighted the need for clear policy direction, standardised tender clauses, monitoring frameworks, and initial fiscal support to ensure a smooth transition. These enablers are crucial for bridging the gap between policy intent and execution.

Key Enablers for Implementation:

• A notified national mandate with clear percentage thresholds to guide adoption

• Ready-to-use tender clauses and Monitoring, Reporting and Verification templates

• Structured training programs for procurement teams across departments

• Modest and time-bound fiscal support in the first three years such as predefined green margins in Schedule of Rates, GST relief or carbon credit offsets

One of the most encouraging findings is the relatively low cost impact. The adoption of green steel is expected to increase project costs by only 0.2 percent to 1.2 percent in sectors such as housing, metro rail, and railway infrastructure. This minimal cost increase makes it a highly viable solution for large-scale implementation without significantly burdening project budgets.

The study also highlights that such a mandate aligns well with India’s growing infrastructure investments. With the Union Budget strengthening capital expenditure to ₹12.2 lakh crore for FY2026-27, integrating green steel into public procurement presents a timely opportunity to scale sustainable construction practices while managing emissions effectively.

The report also recommends setting up a dedicated inter-ministerial task force to streamline implementation, address challenges like scrap availability, and ensure transparency in emissions reporting.

Overall, the study positions green public procurement as a powerful lever to accelerate India’s decarbonisation journey. With the right policy push, it can unlock investment, drive innovation, and create a robust market for low-carbon steel in the coming decade.