India to Mandate Green-Rated Steel in All Central Government Projects from FY28

India is set to take a major step toward decarbonizing its steel sector by mandating the use of green-rated steel in all central government projects and centrally sponsored schemes starting from the fiscal year 2028.

According to draft proposals from the Ministry of Steel, projects with iron and steel procurement exceeding ₹1 crore (about $120,000) will be required to source a minimum percentage of their steel from certified green producers.

Specifically, the mandate proposes at least 20% procurement from three-star green steel products, 5% from four-star, and 1% from five-star rated products.

This policy is designed to boost demand for environmentally friendly steel and accelerate India’s green transition in alignment with global sustainability trends, such as the European Union’s Carbon Border Adjustment Mechanism.

Public procurement currently accounts for approximately 22% of India’s total steel consumption, and experts estimate this could rise to 28% by 2030.

The new regulation aims to make the public sector a key driver of green steel adoption, encouraging domestic producers to invest in cleaner technologies and reducing the sector’s carbon emissions footprint.

Officials believe the shift will not only help India meet its climate commitments but also support the competitiveness of its steel industry on the global stage. By integrating environmental impact into procurement policies, the government hopes to promote sustainability without significantly increasing overall project costs.

The Ministry of Steel has prepared a draft cabinet note for this policy, and while no official comment has been made yet, the move is widely seen as a turning point for India’s steel industry and its broader decarbonization goals.

Mandatory green-rated steel in central-government procurement from FY28 is one of the most consequential demand-side signals Indian steel has received - it converts voluntary transition planning into required capex almost overnight. Our climate-action and supply-chain-and-operations teams help producers, downstream buyers and financiers evaluate what mandatory green demand means for capacity and disclosure.