Green Public Procurement In India 2025: Can Government Purchasing Drive A Low-Carbon Industrial Transition?

Policy Update
Arya Gupta

Background

Government purchasing is one of the biggest single levers any economy has on industrial demand, with over 1.6 lakh government buyer entities using the Government e-Marketplace (GeM), (Press Information Bureau, 2025) for procurement where cumulative Gross Merchandise Value reached ₹5 lakh crore before the end of FY 2024-25 (Press Information Bureau, 2025).

Increasingly, climate policy discussions globally are exploring ways to leverage public procurement to support the adoption of ‘green’ products and services that are not yet adequately incentivized by private markets. India has committed to reducing the emissions intensity of its GDP by 45% by 2030, from 2005 levels, and achieving net-zero emissions by 2070 (Ministry of Environment, Forest and Climate Change, 2022) and the carbon-intensive industries such as steel, cement, construction materials are obvious targets for carbon demand-side policies.

Green Public Procurement (GPP) in India has been driven by two parallel fronts rather than being governed by a single national policy. GeM has launched environmental preference categories on its platform in collaboration with the United Nations Environment Programme (UNEP), beginning with Green Room Air Conditioners in June 2021. In the steel sector, one of the most carbon-intensive and procurement-intensive sectors in India, the Ministry of Steel published a report in September 2024, ‘Greening the Steel Sector in India: Roadmap and Action Plan’, which involved 14 stakeholder task forces. Subsequently, in December 2024, India introduced its Green Steel Taxonomy, the world’s first national framework to formally define “green” steel.

Functioning

On GeM, sustainable procurement is achieved in two ways: dedicated sustainable product categories were created, prioritised according to sales volume and potential of environmental impact; the Green Transition Service was developed in collaboration with UNEP, which supports procurement government departments to create a greenhouse gas emissions inventory, measure their carbon footprints, and create a plan to reach net-zero operations. These are not compulsory purchasing requirements, they are voluntary facilitation elements. Departments are not required to purchase green-tagged products; rather, these products receive preferential visibility in the procurement process.

Unlike GeM’s sustainable procurement categories, the Green Steel Taxonomy defines ‘green steel’ based on the carbon intensity of steel production, measured in tonnes of CO₂ equivalent per tonne of finished steel. Steel with an emissions intensity below 2.2 tonnes of CO₂ equivalent per tonne of finished steel is classified as ‘green’.

More importantly, a taxonomy can only define and classify, it does not generate demand, on its own. The Ministry opened its stakeholder consultation in December 2024 on two companion documents supporting that demand, a draft National Mission on Green Steel (NMGS), to coordinate institutional and financial support for decarbonisation, and a draft Green Steel Public Procurement Policy (GSPPP), which would require public and government-sector buyers to favour certified green steel in their tenders.

Figure 1:

Performance

The Ministry of Steel’s website confirms that only the Green Steel Taxonomy has been notified, while The draft NMGS and GSPPP were opened for stakeholder consultation in December 2024, but neither has subsequently been formally launched/notified.. The Ministry’s current homepage describes the taxonomy as “recently … notified as a foundational tool.”

This means that while the definitional and classification work for India’s flagship sectoral GPP initiative has been completed, the demand-creating procurement mandate, the instrument that would translate the taxonomy into actual procurement preferences in government procurement is yet to be finalised and notified. This creates a clear distinction between the supply and demand sides of the emerging green steel market: while the taxonomy and certification framework are advancing on the supply side, the demand-side instrument: the GSPPP that would create procurement preferences for certified green steel remains pending.

On the GeM side, the initiative to procure sustainable products is also limited in scope in comparison to its total procurement value, the initiative initially began with a single product category, Room Air Conditioners in 2021, there was no independent information on the value or percentage of orders that are green-tagged, despite GeM having recorded more than ₹5 lakh crore in cumulative GMV (NewsOnAir/All India Radio, 2025).

Table 1:

Source: Compiled from Press Information Bureau (2022, 2024), Newsonair / All India Radio (2024, 2025), and Ministry of Steel, Government of India (steel.gov.in). See Selected References for full citations.

It is also worth noting that India’s existing mandatory preference policy for steel procurement, the Policy for Providing Preference to Domestically Manufactured Iron & Steel Products (DMI&SP), first notified in 2017 and subsequently revised, most recently in 2025 operates entirely independently of the new Green Steel Taxonomy. DMI&SP grants procurement preference based on domestic value-addition and local-content requirements specified under the policy, with no reference to carbon or emission intensity, meaning India currently operates two separate steel procurement preference logics, one based on domestic content and another, still not in force, focused on low-carbon steel.

Impact

In total, India’s GPP has been building real conceptual and technical infrastructure, but so far hasn’t launched a mandate for purchase that would make it consequential, as envisioned in the title of this article. India was the first country in the world to establish a national framework for defining ‘green steel’ and to the green listing initiative by GeM as a good example of institutional commitment to leverage procurement as a sustainability tool. Sadly,  a taxonomy which classifies steel without a procurement policy which prefers it to work for now not as a demand-side climate instrument, but as a measurement and disclosure standard.

A recurring pattern across several recent industrial and financial sector initiatives in India is the gap between policy formulation and implementation. This includes differences between the approval and actual disbursal of funds, as well as between establishing a formal definition and achieving its practical application. In the case of green steel, it is being applied practically, there is no guaranteed market for certified low-carbon steel producers for their higher-cost product, although the government has already told them, via the taxonomy, precisely what ‘green’ means.

Emerging Issues

• Absence of a mandatory demand-side instrument: The National Mission on Green Steel and Green Steel Public Procurement Policy are still in draft, even though the Green Steel Taxonomy on which they rely was notified within days of the stakeholder consultation in December 2024 and hence classification has been far ahead of the demand-creating procurement policy.
• Parallel procurement frameworks: The current mandatory steel procurement preference (DMI&SP) and the new Green Steel Taxonomy, which is slated to be effective once notified, are running on parallel and divergent tracks, which could result in mixed signals to steel suppliers once notified.
• Limited measurement of green procurement: India’s overall GPP progress is hard to measure or verify independently as the green procurements implemented by GeM are narrow in scope and an official, disaggregated tracking of green-tagged procurement value or share was not found, given its total GMV of more than ₹5+ lakh crores per annum.
• Fragmented GPP framework: There is no single national Green Public Procurement (GPP) law or policy in India, but instead the existing policy is a series of sector-specific taxonomies (steel) and a voluntary platform-based initiative (GeM) that can lead to differing standards, as green criteria may be applied to additional categories of carbon-intensive public procurement, including cement and construction materials.
• Limited public tracking of implementation: There is no publicly accessible official tracker specifically documenting the transition from the Green Steel Taxonomy to a procurement mandate.
• Scale of the demand opportunity: The existing DMI&SP framework recorded steel procurement worth ₹26,002.85 crore in FY 2024–25, illustrating the scale of government-linked steel demand that could potentially serve as a channel for green-steel procurement (Ministry of Steel, 2026).  Even if a future green-steel procurement requirement initially covered only 10% of this procurement value, it would represent an indicative demand pool of about ₹2,600 crore for certified lower-emission steel. This illustrates why translating the Green Steel Taxonomy into procurement preferences could provide a meaningful demand signal to producers.

Way Forward

To address the gap between policy formulation and implementation, the following steps could strengthen India’s Green Public Procurement framework:

• Finalize and notify the GSPPP: The Green Steel Public Procurement Policy (GSPPP) should be formally notified to translate the Green Steel Taxonomy into actual procurement demand from public and government-sector buyers.
• Align existing procurement preferences: The existing DMI&SP domestic-content preference should be reviewed alongside the Green Steel Taxonomy’s emissions criteria. Aligning these frameworks could help avoid conflicting procurement requirements and allow a single steel tender to account for both domestic-origin and low-carbon criteria.
• Improve monitoring of green procurement: GeM should periodically publish disaggregated data on green-tagged procurement value and its share of total GMV. This would enable researchers and policymakers to assess actual progress in GPP rather than relying on the presence of green product categories as a proxy.
• Develop a broader national GPP framework: India could consider whether a national GPP framework would be more effective than developing separate sector-specific instruments over time. Such a framework could establish common principles for extending green procurement criteria to other carbon-intensive sectors, including cement, construction materials, and vehicles.

References 

Ministry of Commerce and Industry. (2022, June 4). New initiatives by GeM to promote sustainable public procurement of products and services. Press Information Bureau, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1831192

NewsOnAir / All India Radio. (2025, March 17). GeM surpasses ₹5 lakh crore GMV, achieves milestone in public procurement of India. https://www.newsonair.gov.in/gem-surpasses-5-lakh-crore-gmv-achieves-milestone-in-public-procurement

Press Information Bureau. (2024, December 12). Union Minister of Steel and Heavy Industries, Shri H. D. Kumaraswamy, releases India’s Green Steel Taxonomy. Ministry of Steel, Government of India. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2083839

NewsOnAir / All India Radio. (2024, December 12). Union Minister H. D. Kumaraswamy unveils ‘Green Steel Taxonomy for India’. Government of India. https://www.newsonair.gov.in/steel-and-heavy-industries-minister-h-d-kumaraswamy-launches-taxonomy-of-green-steel-for-india

Ministry of Steel. (2026). DMI&SP procurement data. Government of India. Steel Import Monitoring System. https://sims.steel.gov.in/DMISP/LoginMF.aspx⁠

Ministry of Steel. (2024, September 10). Green Steel Initiative [Greening the Steel Sector in India: Roadmap and Action Plan]. Government of India. https://steel.gov.in/green-steel-initiative

Ministry of Steel. (n.d.). Policy for providing preference to domestically manufactured iron and steel products (DMI&SP) in government procurement. Government of India. https://steel.gov.in/policy-providing-preference-domestically

Ministry of Steel. (2026). Home [Current status of Green Steel Taxonomy notification]. Government of India. https://steel.gov.in/

About the Contributor

Arya is a Research and Editorial Intern at IMPRI Impact and Policy Research Institute, New Delhi. A Master’s student pursuing Economics at Delhi School of Economics and Economics graduate from Shri Ram College of Commerce (SRCC), University of Delhi, and originally from Jharkhand, Arya’s research interests include Indian political economy, labour markets and development policy.

Acknowledgements

The author thanks the IMPRI review team (Arjya Shree Pandey and Madhuritha D) for their comments and guidance on this Policy Update. 

Disclaimer 

All views expressed in the article belong solely to the author and not necessarily to the organisation.

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