Government purchasing power could transform one of India’s most carbon-intensive industries.
Steel builds modern India, from metro systems to bridges, from affordable housing to power infrastructure. But this essential material comes with a significant climate cost. The steel industry accounts for 10-12 per cent of India’s total emissions. Green Public Procurement is a powerful policy solution to help India lead the green steel transition.
By leveraging the government’s massive purchasing power, GPP can create early demand for low-carbon steel, send clear market signals, and accelerate India’s industrial transition. With government-funded infrastructure accounting for 27 per cent of India’s steel consumption, the opportunity for impact is immense.
What is Green Public Procurement?
Green Public Procurement (GPP) transforms how governments buy products, such as steel. Instead of selecting suppliers based solely on price, GPP prioritises steel produced with lower carbon emissions. It’s a straightforward concept with transformative potential.
India’s government spends approximately ₹2 trillion annually on infrastructure projects. Each bridge, railway line, and public building represents a choice: continue supporting carbon-intensive production or invest in a cleaner future. GPP ensures these choices align with India’s climate commitments.
Lessons from across the globe
Countries worldwide are already demonstrating what works, and what doesn’t, in green steel procurement. These could provide important lessons as India embarks on its own GPP policy journey. We’ve analysed three pioneering approaches that offer crucial insights for India’s journey.
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Why GPP matters for India’s steel sector
Steel producers face a dilemma. Investing in green technology costs billions, but without guaranteed buyers, the risk feels insurmountable. GPP breaks this deadlock by assuring producers that if they make cleaner steel, the government will buy it.
Our analysis with Global Efficiency Intelligence found that government steel procurement generates 61 million tonnes of CO₂ annually – equivalent to 13 million cars. A strong GPP policy could cut this by eight to 40 million tonnes each year. That’s climate action at scale.
The European Union’s Carbon Border Adjustment Mechanism now taxes high-carbon imports. Other regions are following suit. Indian steel producers who transform their operations today will dominate export markets tomorrow. GPP helps them make that leap by creating a domestic market for innovation.
Government-funded infrastructure consumes 27% of India’s steel, representing a large, coordinated buyer. This concentration delivers unique power, public procurement sets uniform standards that cascade through entire supply chains.
More critically, government contracts provide predictability. Five-year infrastructure plans and committed budgets give steel producers the long-term demand certainty needed to justify green technology investments. Mandates in official tender documents give green steel sector-wide credibility and embed policy in everyday procurement.
The road ahead for India’s GPP policy
The steel industry stands at a crossroads. The choices made now will determine whether India’s infrastructure boom locks in emissions for decades or catalyses a transformation. GPP ensures those choices point toward a sustainable, prosperous future.
Success won’t happen in the short term. But with clear targets, strong institutions, and collective commitment, India can prove that industrial growth and climate action aren’t competing goals, they’re complementary strategies for building a world that lasts.
Get in touch to learn more about our work
If you’re interested in learning more about our work on Green Public Procurement as a policy tool to accelerate steel decarbonisation in India, or our broader work get in touch, we’d love to hear from you!
