Procurement certainty, fiscal support seen key to scaling low-carbon steel
NEW DELHI, Jan 24 (The CONNECT) – Ahead of the Union Budget, five leading industry and policy organisations working on steel decarbonisation have jointly urged the government to anchor green steel adoption through a clear public procurement mandate, backed by targeted fiscal support.
Public procurement is among India’s largest sources of steel demand, accounting for an estimated 22–25% of consumption across roads, railways, metro projects, housing and urban infrastructure. As the Centre advances green steel policy frameworks, stakeholders argue that demand-side certainty—through aligned procurement rules and budgetary provisions—will determine whether low-carbon steel scales meaningfully.
India has already taken an early global lead by notifying a Green Steel Taxonomy, defining what qualifies as low-carbon steel. Policy experts say the next step is to translate that clarity into assured demand, with Green Public Procurement (GPP) emerging as the most effective market-creation tool.
Updating tender norms to explicitly specify low-carbon steel and recognise the associated price premium would give procuring agencies and contractors confidence to source green materials, while offering producers the predictability needed to plan capital investments. Without this alignment, they warn, taxonomy alone will not shift market behaviour or emissions outcomes.
Industry and policy practitioners identify two critical levers: a credible GPP mandate and time-bound fiscal measures. Support from the Ministry of Finance—through incentives to bridge early green steel premiums or GST rationalisation—is seen as essential to enable adoption during the transition phase.
International experience suggests that well-designed, temporary fiscal interventions can ease early procurement constraints, support supplier readiness and accelerate market formation, without locking governments into long-term subsidies.
“Procurement readiness is becoming a defining factor of competitiveness as global markets move toward low-carbon materials,” said K S Venkatagiri, Executive Director, CII. He said India’s taxonomy provides credibility, but scaling green steel will require predictable procurement frameworks and fiscal support to close the cost gap.
Sakshi Balani, Director at Climate Catalyst, said the main constraint is not technology but weak demand signals. “When procurement rules account for the green premium, adoption can scale, with overall project cost increases typically remaining below 1% for large infrastructure projects,” she noted.
Neelima Jain of the India Energy & Climate Center, UC Berkeley, called for a phased mandate backed by budgetary underwriting of early premiums. She said falling renewable and storage costs are pushing green hydrogen toward price parity by 2030, while strengthening export competitiveness as the EU’s carbon border rules tighten.
Ali Hasanbeigi, Founder and CEO of Global Efficiency Intelligence, said global evidence shows GPP works best when demand signals are clear, phased and supported in the early years. “India can unlock investment and stay competitive without long-term subsidies,” he said.
Vaibhav Doshi, Associate Partner at Xynteo, added that even early steps—such as disclosure norms or minimum shares of lower-emissions steel—can create strong demand signals and build confidence for cleaner steel investments.
