Green steel mandate in works for government projects

India plans to mandate the purchase of green-rated steel for eight years in all central government projects and centrally-sponsored schemes from FY28, people aware of the development said. The steel ministry has prepared a draft cabinet note on the proposal, a government official said.

For a 3-star rated steel, a minimum 20% procurement is likely to be mandated, while for a 4-star rated steel, the requirement could be 5%. For 5-star rated steel, minimum 1% requirement could be mandated, one of the persons said.

The move is being deliberated as a measure to drive demand for green steel in public procurement, which constitutes about 22% of the country's total steel consumption, they said.

The proposed policy may be applicable to projects where procurement value of iron and steel products cost is more than ₹1 crore in value.

The steel ministry did not respond to ET's queries till press time.

The policy is in line with Centre's commitment towards decarbonising steel sector and achieving sustainability targets, the official quoted above said.

The public sector constitutes a significant share of the total steel consumption in the country that was around 22% in FY24 and may rise to 28% in FY30, according to industry experts.

With the current system of procurement on a least cost basis, the environmental impact may not be imbibed in it. A policy to mandate the procurement of such steel could lead to promoting sustainability without a significant increase in overall cost, the person said.