26% green steel mandate can unlock 16mtpa demand by FY30: CII study

Mandating 26% use of certified green steel in public projects could unlock up to 16 million tonnes per annum (mtpa) of demand from government-linked projects alone by 2029-30, said a study by the Confederation of Indian Industry (CII) on Tuesday.

The industry readiness assessment, developed by CII’s Green Business Centre with support from Climate Catalyst, said a higher 37% mandate could create demand for up to 24mt of green steel and help avoid as much as 29.7mt of carbon dioxide emissions by 2029-30—equivalent to taking 6-9 million cars off the road each year.

Public procurement in the country accounts for ₹45-50 trillion annually, while government-linked projects consumed about 31.6mt of steel in 2023-24, generating nearly 70 million tonnes of CO₂.

With the Union Budget 2026-27 raising capital expenditure to ₹12.2 trillion, the report said shifting even a portion of this demand to low-carbon steel could generate significant emissions savings with only a marginal impact on overall project costs.

Ecosystem is in place

The study found that 93% of steel producers surveyed—26 out of 28 companies covering 88mtpa of crude steel capacity—are ready to supply certified green steel at scale, subject to a notified mandate and a transparent mechanism to recover incremental costs. Suggested measures include a green premium, GST concessions or carbon credit offsets.

On the demand side, 12 major public procurers indicated readiness to implement a green steel mandate provided four enablers are in place: A notified national mandate with clear thresholds; ready-to-use tender clauses and monitoring, reporting and verification (MRV) templates; brief training for procurement teams; and limited, time-bound fiscal support such as a predefined green margin in the schedule of rates (SoR), GST relief or carbon offsets for the initial three years.

The report recommends introducing a 26% mandate as an activation floor for public projects valued above ₹1 crore starting 2027-28, with a pathway to raise this to 37% post-2029-30. Demand for green steel is projected to rise steadily under both scenarios in line with India’s expanding infrastructure pipeline.

A 26% mandate could avoid up to 20.9mt of CO₂ emissions by 2029-30, while a 37% threshold could prevent 29.7mt, the study said. Case studies of Pradhan Mantri Awas Yojana-Urban 2.0, metro rail systems, and Indian Railways projects showed that switching to green steel would increase total project costs by just 0.2% to 1.2%.

K.S. Venkatagiri, executive director, CII, said green public procurement could play a catalytic role in accelerating the steel sector’s transition. “By encouraging the use of certified low-emission steel in public infrastructure, housing and transport projects, government demand can help bridge the cost gap between green and conventional products and provide clearer signals for innovation and investment,” he said.

Sakshi Balani, director (India) and director (policy) at Climate Catalyst, said a clear mandate could move the sector faster than subsidies alone. “GPP is the missing demand signal that can unlock large-scale investment and move the industry towards a 16-24mtpa green steel market by 2029-30,” she said.

Industry suggestions

The study noted that based on draft Carbon Credit Trading Scheme (CCTS) trajectories and Green Steel Taxonomy thresholds, some integrated producers are expected to begin entering three-star categories from 2026-27 onwards, signalling a two-stage acceleration in green steel availability through the decade.

It also flags systemic constraints, including a projected scrap shortage of 20-30mtpa by 2030, inadequate upstream emissions disclosure from iron ore and coke suppliers, fragmented procurement systems across states and public sector undertakings, and a lack of harmonized MRV formats.

To address these gaps, the report proposes setting up an inter-ministerial green public procurement steel task force under the steel ministry to oversee rollout and coordination across procurement, finance and industrial policy. It also calls for mandatory upstream emissions disclosure across iron ore, pellets, scrap and energy inputs to support credible product-level accounting under the Green Steel Taxonomy.

With institutional mechanisms such as the General Financial Rules 2017 and the CCTS already in place, the study argued that a sequenced rollout, beginning with a mandate announcement in 2026-27, SoR integration, standardized tender templates and pilot projects, could enable public procurement to absorb up to 24mtpa of certified green steel by 2029-30.

The report concludes that green public procurement could emerge as the single most impactful tool to translate India’s steel sector climate ambitions into measurable action this decade, while future-proofing public infrastructure and reinforcing global competitiveness.