In a landmark step toward decarbonizing heavy industries, the Indian government is set to mandate the use of green-rated steel in all central government projects and centrally-sponsored schemes beginning FY2027–28, according to people familiar with the development.
The Ministry of Steel has already prepared a draft Cabinet note, laying the groundwork for this green procurement policy—one that could reshape steel consumption patterns in India’s public sector.
Key Highlights:
- Mandatory Green Steel Quotas:
- 3-star rated steel: Minimum 20% procurement.
- 4-star rated steel: Minimum 5% procurement.
- 5-star rated steel: Minimum 1% procurement.
- Threshold for Applicability:
Projects involving iron and steel products worth over ₹1 crore (~$116,550) will fall under the scope of this mandate.
- Driving Demand in Public Procurement:
Public sector projects currently account for 22% of India’s steel consumption, projected to rise to 28% by FY2030. This makes government procurement a powerful lever to stimulate demand for green steel.
- Environmental Alignment:
The policy supports India’s broader goals for industrial decarbonization and aligns with its commitments under various global climate agreements.
- Cost vs Sustainability:
Officials note that since current procurement is based on lowest cost, environmental impact often goes unaccounted for. The new policy aims to balance cost with sustainability imperatives, with negligible impact on total expenditure.
- Awaiting Official Response:
The Steel Ministry has yet to formally respond to media inquiries about the proposed timeline and implementation roadmap.
Why This Matters for Logistics & Infrastructure Stakeholders:
With steel being a foundational material in port infrastructure, logistics parks, warehouses, and road/rail freight corridors, this policy could reshape procurement strategies for EPC contractors, government tenders, and public-private partnership (PPP) projects.
